How to count your proper year’s end auto parts inventory
Many companies begin planning for the year’s end as the year draws to a close. These steps will help you get started on your year end. To ensure an efficient year-end auto parts inventory count, it is important to train your employees. While inventory counts might seem easy, there are many mistakes you can make that can affect the accuracy of your inventory counting. These errors could include:
Incorrect unit measurement
An error in unit measurement occurs when the unit used for physical counting is different from the one in inventory management. This is a common error caused by hose, wire and other parts. You may have counted in inches but the inventory system uses meters. Bulk fluids can also make it difficult to measure units correctly. This will help you avoid an error.
Incorrect part number
A mistaken part number is when you count parts and assume it has another number. This will cause two parts to become confused. The part you believe it to be will have a higher count, while the part it really is will have lower counts.
It is possible to avoid this error by properly organizing bins, using labels (see step 2), and verifying each piece’s numbers before counting.
Prepaid and pre-billed parts
Overage will occur if prepaid or pre-billed components are counted in a physical inventory. Before counting, make sure you exclude these parts and label them “do not inventory” or DNI.
This happens when consignment inventory is not counted correctly by counters. This error happens less often in parts departments, but it is still something your team should be aware. Similar to the previous mistake, you should mark stock consignment inventory with DNI to avoid confusion.
Incorrect cut-off errors occur when new inventory is included in the physical count but not the invoice. When you compare the physical count to the quantity in your system, it will be apparent that you are short. Once you have entered the invoice and made the adjustment, you will be over the same amount that you made the adjustment. You can prevent this error by properly marking and excluding unentered inventory.
WIP errors are when parts that are currently being installed on vehicles have not been counted, or have not been linked to a job in the accounting software. This can result in inventory discrepancies and is often caused by a process error at the parts department.
To avoid this mistake, ensure that open work orders containing parts that have not been entered into the system are counted during physical inventory.
Once your employees have acquired the skills and knowledge to accurately complete a year-end inventory you will want to ensure that your inventory is properly organized and ready for counting.
Although most automobile dealerships make every effort to maintain an organized inventory, there are times when parts get misplaced or are auto parts inventory not in the correct order. If you’re one of those who have to organize their inventory, make sure that all bins, shelves, and packaging are clearly labeled. Also, keep the same parts in the same place whenever possible and don’t put parts too close together.
Now that you have sorted your inventory, it’s time to begin the physical count. It may seem easier to do your count at night, but it’s not always possible. If you are required to count during office hours, make sure to communicate with service and receiving departments to ensure they understand their roles as well as the appropriate procedures.
Also, you want to make sure that all employees are aware of the fact that they should not move any parts unless it is being sold. After you have counted, the parts must be properly recorded as sold.