The Benefits of Proactive Inventory Management

March 26, 2024
Hear from Keith Manich, ATI VP of Collison Services on managing inventory, a commonly overlooked topic for businessowners.

Rarely do we find ourselves in business discussions where managing inventory takes center stage. It's not typically a subject that ignites passion among staff or garners immediate attention. Often an afterthought, the current economic landscape demands that we reevaluate this approach and make inventory management a higher priority, so that employees and owners grasp its significant impact on the business.

Inventory management responsibilities including ordering, itemizing, and strategic placement of stock are now indispensable in determining cash flow and meeting daily operational demands. What we possess is becoming just as vital as the work itself. Therefore, it's important to add inventory management as a core agenda item, warranting weekly meetings dedicated to assessing and ensuring compliance. 

Benefits of Having an Inventory Compliance Plan
Developing a robust inventory compliance plan helps you eliminate the guesswork by proactively identifying the “needs” of your collision shop. It should walk you through identifying which supplies are needed, how much of each, and most importantly, which of these items are being billed to the repair order. You should also identify who has the responsibility and control of ordering, stocking, and ensuring the supply output is effectively managed. Taking this proactive approach will help ensure successful inventory cost management.

Approximately 53% of the expenditure outlined in repair plans is allocated to parts and materials. Nonetheless, a substantial portion of these materials are strategically stocked to minimize the frequency of orders. It is within this inventory that the realm of inventory control holds its greatest sway. These items, often prone to misplacement, can swiftly accrue significant costs if not managed diligently.

Download ATI’s FREE 6-Step Inventory Management Checklist to create a proactive compliance plan to effectively prevent waste and control costs: https://bit.ly/49gHkna 

Steps for Building an Inventory Compliance Plan
1.    Designate 1 or 2 individuals and assign inventory management tasks
2.    Review orders to ensure they are accurate
3.    Create an audit list containing all materials (parts will be identified by invoice and RO#)
4.    Identify a process that will be followed weekly to ensure that a physical count of the inventory is completed
5.    Lock cabinets where inventory will be stored
6.    Place needed materials on work carts daily to ensure the techs have what they will use
7.    Restock nightly to control usage

These measures help maintain the inventory at optimal levels, preventing unnecessary depletion due to oversight. Effective inventory management not only leads to substantial savings for the owner but also ensures everyone has access to required items when needed. Prioritize stocking essential items. While it's tempting to capitalize on sales and make bulk purchases, it's essential to exercise control.

Given the rising costs of materials, it's crucial to allocate time for managing expenses through inventory control.

Contact ATI for more information about this topic or other collision shop growth solutions.

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