Anyone working in retail knows how important inventory management is. This holds especially true for repair shops since they constantly have to deal with repairs, which require parts and tools. The problem is that when you’re ordering parts and supplies regularly, keeping track of everything can quickly become overwhelming. Without a strong grasp of your inventory, you could end up losing thousands of dollars in revenue. This is why most repair shop management software prioritize inventory management.
If you want to stay on top of your inventory, you need to be familiar with the best ways to manage it. Having some good practices to running things can help you break free from the stress of repair shop inventory management. With that out of the way, let’s dive into the 4 secret tricks to keep your repair shop inventory from being a disaster.
Tip No. 1 – Know When Your Stock Is Going to Need Replenishing
Every business that works with parts has to maintain a balance of demand and supply. In a repair business, parts will be used to perform repairs, which then need to be replenished. The important thing here is to know what parts are used more frequently and when they are due to be restocked. Figuring this out isn’t easy, but a couple of tricks can get you there.
Have a look at your inventory counts over a period of time. See how much stock of a particular item you initially ordered, and how long it took for it to go down by about 20%. This will help you predict when your item is about to run out and when you’ll need to order it again. You can then put in a requisition to order the item from your supplier before you’re out of parts.
What to look out for
There are a couple of things to keep in mind – first, you need to continuously check on your numbers. Finding out where you stand with your inventory at any given time is important to stay on top of things. That means you’ll have to make it a habit to get regular updates on your stock. Having an automated repair shop management software that pings you at different intervals can help.
Second, know how long it takes you from placing your order to having it delivered. Deliveries take time and you need to be prepared for the wait. It’s just like when you take a device in for repairs – there’s a bit of wait before you actually start work on it. If you know how long your delivery will take, you can place your orders at an appropriate time accordingly. This concept is similar to the Just-in-Time (JIT) model. We don’t recommend having JIT as the de-facto standard, however, you can learn how it works and adopt some of its better features.
Lastly, set an alert system for when your stock starts to fall low. Having an early-warning system in place lets you know when it’s time to act. To do this, you can choose a minimum stock quantity that suits your use case and place an order when you’re at that number. This is called a reorder point and it can be calculated using the formula
(lead time in days × avg. daily sales volume ÷ safety stock). Keeping a flexible margin here can help. Remember, you’ll need to have some of your safety stock available before your shipment comes in.
Tip No. 2 – Keep Reviewing Your Suppliers
Let’s face it, you’re going to be ordering parts from your vendors regularly at your repair shop. If you want to make everything run smoothly, you need to have a good supply chain. This means that even after you enter into business with a supplier, you’ll need to review and evaluate them in your business’ best interests.
Let’s say your supplier starts working with a new insurance company. The insurance providers cause them to have a change in policies with their customers, meaning you. It is important to know how those changes affect your business – you may have to spend more to procure parts or have additional measures added to your business. The more aware you are of your suppliers’ status, the better you can manage your supply chain – and as a result, your inventory – accordingly.
You must have a supplier relationship of constant improvement.W. Edwards Deming
Keep an eye on these points
When dealing with your suppliers, you need to constantly be asking questions about the relationship. These questions should represent your priorities, why you’re working with your suppliers in the first place. Take the answers to these questions very seriously, since they will affect your business’ success.
The questions you need to be asking are;
- does your supplier align with your business’ core values?
- is your supplier able to ship to you without delays?
- are the cost of goods going to increase over time? If so, by how much?
- can you procure other device parts from them in case you diversify (laptop, game console, etc.)?
- will your supplier be hit with part shortages any time in the future?
- will business with your supplier be affected in case of a work stoppage (strikes, etc.)?
- what level of priority support will your supplier provide in times of need?
- is there and open and effective line of communication to your supplier?
- what kind of feedback mechanism does your supplier incorporate?
- is their business worth referring?
Some of these points may seem far detached from your actual business at first glance. But it is important to know what affects your supplier that would consequently affect your business with them as well. Any changes to their operations, dealings, or strategy will reflect on you as well. Be sure to keep reviewing them so you can maintain a healthy relationship.
Tip No. 3 – Document Your Inventory Management Procedures in a Handbook
Running a repair shop business means you’re following a set of procedures every day. Repair jobs need to be tended to in a certain way. Customers need to be informed a certain way. When you run operations like these, you not only have to define what those procedures are but also train your staff on how to carry them out. Your inventory management should be no different.
Having your inventory management policies documented in a company handbook can go a long way. For one thing, you’ll know what the standard operating procedures are when working with your stock and can easily reference it when you need to. There will be times when you need clarification on how to sort and manage your inventory. Having a handbook detail everything will be incredibly useful there. And since a company handbook has policies that are changed infrequently, you can be sure you’re getting the information that applies at the time.
The other benefit of documenting your inventory management procedures is so that staff can learn them quickly. If you’ve laid out your plans in a company handbook, you can have your employees be familiar with them without additional training. It sort of catalogs your entire workflow in one go that the staff member can review at any time. And, it’s also handy for when they’re on the job in case they need to reference it quickly.
Check out our podcast with Nicole Russell of Cellbotics to learn how important training is for your repair store and the best way to go about it.
What to include in the handbook
Your handbook will contain policies and procedures for all operations at your repair business. For inventory management, there are a couple of key points you need to add, among others;
- who your suppliers are and how to get in touch with them,
- how to order, receive, store & catalog parts from your suppliers,
- what valuation method you’re applying to your stock,
- how the stock should be used,
- who to contact for more information on inventory management.
These points will make it crystal clear for your employees what they need to do while on the floor. As a result, they will be faster and more efficient at managing inventory, taking the trouble out of the equation.
Super Secret Tip No. 4 – Have an Automated Repair Shop Management Software
With everything going on at your repair store, you’ll have a really hard time running your inventory on spreadsheets. Having an automated repair shop management software will be much more beneficial for your business. It takes care of all your repetitive tasks and saves you loads of time. You won’t have to file orders locally and send your suppliers a different note anymore. Neither will you have to print dozens of inventory labels or serialize products one by one. In essence, an automated system will take care of a lot of things for you that usually bog down your operations.