Why not to 'over-buy' parts

As seen in Fleet Equipment


Many fleet maintenance shops tend to buy more parts than they need, in effect storing company cash on parts room shelves. Even when buying ahead, they sometimes pay more than necessary.

That’s the word from 30-year vehicle maintenance veteran Dave Reed, maintenance consultant for Arsenault Associates, providers of Dossier maintenance management solutions.

According to Reed, if the shop manager needs a particular part 12 times a year, he is likely to buy 12 at a time. “So we don’t have to worry about them,” the manager will likely explain.

“Let’s say it’s a $100 part,” Reed said. “If the manager buys 12 of them in January, that’s $1,200 out of the company’s cash flow that he just parked on a shelf. Multiply that $1,200 by dozens or hundreds of parts, and you’re looking at serious money.”

Managers should do some research. “Did you use those parts evenly throughout the year or did you use all 12 of them in the first three months? If you use all 12 in the first three months and nothing thereafter, then you may want to buy six now and six more when you get down to one or two. The point,” he said, “is to avoid tying up that $1,200 in cash on a shelf.”

He said he recently went into a parts room where there were a dozen cases of fuel filters—12 filters to a case, 144 filters in all. “We go through a lot of them,” the manager explained. Reed went to the computer and ran a report that showed that the shop was using about 10 filters a month. That meant the shop had a year-and-a-half supply of fuel filters.

“We got a good deal on them,” the manager explained. The “deal” turned out to be a 5% discount. “They might have been better off buying them one at a time,” Reed said.

Finally, some parts sales reps can be a problem as well.“Just because a sales guy walks in and says, ‘hey, I’ll give you a good deal’ doesn’t mean it is a good deal,” he said.

In one shop Reed visited, a salesman had sold the manager parts that came 12 in a box. The parts sold for $5 apiece, but the salesman offered a “good deal”—a whole case for $65, $5 more per box than per item.