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Inventory management in auto paint supply stores. 6 problems and solutions. Part 1.

If you own an auto body repair supply store, you know how many product codes you must have in stock. Besides keeping your mixer full and running, there are a handful of other products you cannot afford to be missing. Abrasives of all grits and shapes, various primers, fillers, clears and other consumables are all necessary for the everyday sales. Without having your warehouse stocked up, you will not  be able to retain customers, because no one will wait for you if the needed item is not available. On the other hand, excessive inventory is a trap, which is eating up the profits. It could be very dangerous if not addressed in timely manner. Below I bring to your attention the major challenges and solutions in stock management for the collision repair suppliers.

Short shelf-life products

It is a well-known fact that many materials in the car refinishing industry have a limited shelf-life. In fact, a lot of clear coats, fillers, sealants and primers are usable up to 12 months. Probably you know how hard it is to throw away the expired products. It feels like you are throwing away hard earned cash. Literally.

Solution

The easiest way is to implement FIFO system, which means “First in, First Out” into your CRM or any other inventory management system (I hope you have one). FIFO means that whatever product arrived first, will be picked up for the orders first. By doing this you will avoid shipping fresher product arrivals. Usually, FIFO is linked to the product batch numbers, so employees in the warehouse know exactly which lot to use for the orders to be prepared. And, yes, do not stock ANY product, which is not sold at least a few times in a 12 months time. Avoid it by any means.

Low inventory turnover

In all business books you will find more or less the same statement. The higher the inventory turnover is, the better. You really want to have your money invested in the goods that sell fast and bring profit as soon as possible. But in the automotive refinish supply chain not all the goods sell at the same pace. Particularly on the equipment side, spray guns or sanding and polishing machines are a  “must have” on the shelves, but it is hard to predict when they will be sold. Similarly, certain chemical products, for example, matt clearcoats or rare xirallic pigments may not be in the painter’s everyday shopping list.

Solution

Personally, I have developed a simple two-step process for selecting, which products should stay in stock, and which should not take up space on the shelves. Firstly, I trace the sales pattern, and whatever product hasn’t been sold within the last 12 months, should be dumped. Secondly, the products which I sell just a few times per year should have higher than average profit margin. Otherwise it is not financially sound to keep low margin goods for the long time.

Mistakes in stock accountancy and customers orders

Unfortunately, mistakes happen, and usually these mistakes cost us money and undermine our image in the eyes of the customers. However, it is in our hands to minimize them.

Solution

There is no easy remedy for the poor stock handling. Below I bring to your attention just a few essential steps, which will definitely help you put things in order in the warehouse:

  • Conduct at least two times per year a full inventory check.
  • Implement sophisticated, but easy to use inventory management software.
  • Use barcode scanners in all stages of the product movement – in and out of stock.
  • Train your stuff. Remember, most of the mistakes are simple human errors. Warehouse employees are as important as any other member of your team. Let them know it.
  • Bring your purchasing department close to the warehouse employees. These two departments must work real close to each other.
  • Use FIFO process with all products (see the explanation above)

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