In the car business we often have the “if it ain’t broke, don’t fix it” mentality. This holds true especially when it comes to the fixed operations departments. It has always been assumed if car sales were flat; the fixed ops department would carry the dealership. Today more than ever with our current economy it is imperative that all dealers take a proactive approach to all aspects of fixed operations.

A dealer’s parts inventory can be valued anywhere from hundreds of thousands of dollars to millions yet in many instances dealership owners do not focus much on this department as long as the profits stay consistent from year to year. A dealership’s parts inventory is a very large asset that needs protecting. One very important event that should be happening yearly in order to protect this asset is a parts physical inventory. There is much debate whether a physical inventory should be done by an outside inventory company. Some dealers feel it is an unnecessary expense but in reality a lot of good can come out of using an outside inventory company even for extremely well run parts departments.

Can you use a fresh perspective? Keep in mind by using an experienced inventory company you are also gaining access to best practices of hundreds of other dealerships’ parts departments. Just because you do things a certain way does not mean it is the best way to do them.

Do you have weaknesses in controls? Parts theft is a very real problem. Even the tightest run parts department can have vulnerabilities. If you have a variance after performing an inventory is any follow up done on the variance or do you just adjust the general ledger and move on? An outside company can work as a team with your staff to conduct the physical and get to know the current procedures to determine of controls need to be tightened. Typically most parts physical companies have experience in parts, accounting and DMS. This can come in handy if any discrepancies arise between the parts pad and the accounting general ledger.

Are you worried about the expense of an outside inventory company? The reality is that most inventories are completed in 6 to 8 hours and cost far less than you might imagine. As an added value, parts inventory companies typically include consulting services with the cost of the inventory. Many times implementing just one of these ideas can pay for itself over time.

Looking for a reputable parts physical inventory company? Be sure to ask your accountant.

Jennifer Enck