Optimizing a fleet’s parts inventory can be very beneficial to the bottom line. Managing a parts inventory well can lower the number of preventable maintenance delays that occur. It can also reduce overall vehicle downtime for the fleet. However, optimization can be a challenge for fleets. Luckily, with the right knowledge and tools fleet managers can navigate these challenges and optimize their parts inventory effectively.
In this article, we will outline the top inventory optimization challenges fleets face including:
- managing stock
- selecting purchased stock vs. imprest stock
- knowing the warranty on parts
- removing inventory for out of service vehicles
- determining the correct lead time for parts
Top Inventory Optimization Challenges
The challenge of optimizing inventory is fairly complex, but it can be tackled. It helps to get your parts organized, make use of VMRS codes, and use your vehicles’ service history.
Knowing the Warranty on Parts
When fleets repair vehicles, they need to know which parts are under warranty. Not properly billing warranty parts due to misinformation can create unnecessary costs for fleets.
Mechanics often don’t have access to information about the parts they work with such as when they were last replaced or whether they are under warranty. This can cause major issues and the warranty of these parts not being utilized.
One way to stay on top of warranties is by using a parts inventory system to keep track of each part’s warranty status. The system can often provide alerts if a part being replaced is under warranty. It allows mechanics to have a full overview of their parts’ inventory status.
Selecting Purchased Stock vs. Imprest Stock
Purchased stock and imprest stock are two main options for fleet inventory management. Purchased stock is often bought with a margin. Imprest stock is provided and managed by an outside supplier. In this case, the supplier is in charge of monitoring the inventory and keeping it up to date.
Purchased stock allows fleets to get larger discounts on their inventory. These discounts can be used to lower maintenance costs. The downside of purchased stock is that parts may become damaged, lost, or obsolete. This represents a significant financial risk in some fleets.
With imprest stock, fleets do not bear any financial risk for their inventory. At any time, fleets can return unwanted inventory items. However, if parts go missing, the fleet is still liable for them.
Removing Inventory for Out of Service Vehicles
Often fleets carry outdated inventory for vehicles that are no longer in service. This dead inventory is expensive to warehouse.
A periodic inventory review is necessary for fleets to find these out of date pieces of inventory. They can then try to recapture some value from them through sale. Remember that just because these parts do not have value to your fleet anymore doesn’t mean they won’t be valuable to someone else.
Correctly Stocking High-Usage Parts
A major inventory optimization issue for fleets is properly managing the level of inventory of frequently-used parts such as filters and brake pads. Not having appropriate levels of stock on hand can increase vehicle downtime significantly.
Determining the Correct Lead Time for Parts
Fleets are often challenged by determining the correct lead time for parts when trying to optimize their inventory. They need to take into account lead-time days for each of their vendors in order to correctly time their receiving of parts.
Tips on Inventory Optimization
Get Your Parts Organized
Fleets can greatly benefit from keeping their parts organized. You may be surprised to hear that a study found 43% of small businesses either do not track their inventory or use a manual process to do so.
Having an organized inventory can help everyone from mechanics to managers understand the fleet’s stock. This can lead to more efficient and effective parts ordering, especially for high volume items that are used frequently for routine maintenance.
Keeping an organized inventory can also assist in identifying and removing obsolete or unneeded parts. These parts raise inventory costs and take up valuable shelf space.
Make Use of VMRS Codes
Vehicle Maintenance Reporting Standards (VMRS) codes were developed by the American Trucking Association. They provide a universal language to assist fleets, OEMs, maintenance employees, and repair shops in communicating about and reporting on maintenance activities.
VMRS codes contain information on the use of parts. They can help fleets figure out which parts should be kept in inventory and which should be acquired on an as-needed basis.
If fleets use VMRS codes consistently, they can get a historical look at their usage and component trends. This allows them to make the purchasing process and parts inventory management more efficient. Using VMRS codes also helps fleets make their preventative maintenance schedules even better by utilizing the historical data on the failure rates of different parts.
VMRS coding at its core allows fleets to track usage and understand what parts are required in inventory. These codes can be extremely helpful in optimizing a fleet’s parts inventory.
Utilize Your Vehicles’ Service History
Fleet vehicles’ service histories are valuable. They can identify trends relating to system failures, component failures, and parts usage. This data can be used to figure out if there are any parts that will be needed soon and if inventory levels should be altered in order to meet demand.
Fleets face a number of challenges when trying to optimize their inventory. Often they make errors related to over or under-stocking certain parts or don’t keep track of what parts are in inventory and which aren’t.
With Azuga, you can track common maintenance tasks and diagnose problems quickly. Our software integrations then allow you to optimize your fleet parts inventory and turn it from being a difficult task to one done with ease. A fleet’s inventory can contain thousands of different parts, but it can be optimized with the right tools and knowledge.
Optimizing a fleet’s inventory can be very fruitful. Many fleets receive an immediate windfall from selling their obsolete parts. In addition, fleets save on costs due to increased efficiencies when their parts inventory is optimized.