Inventory can include items like oil, tools, and large equipment. It also includes stock items, or parts which are sold to the customer during the course of repairs, such as gaskets and timing belts.
Inventory management and parts management go hand in hand, but outside of labor profits, the profit a shop brings in ultimately comes from parts markup at the point of sale. Consequently, there’s very little room for error in managing parts.
Simply put, mismanaged parts means money left on the table and unhappy customers—a combination no shop owner or automotive team wants to experience.
A good auto parts inventory management system should let you:
• Know what parts you have in stock and how many you have
• Track what sells and what sits on the shelf longer than it should
• Help you plan for growth.
With the right auto parts inventory management system, your shop can go from disorganized to a well-oiled machine generating more and more profit.
How to know when it’s time to update your auto parts inventory management system
What are some indicators that your auto parts inventory management could use a tune up? And when should you start looking into shop management systems like Tekmetric? Here are some indicators to look for:
1. Overstocking Parts
It is easy to overestimate the demand for a specific part, especially if you are ordering parts between seasons, ordering specialty parts, or still using pen and paper or a spreadsheet to calculate your inventory.
Whatever the cause, it is important to remember that every part has a carrying cost. You can think of “carrying cost” as the storage cost for a part. Every part that sits on a shelf and occupies space that better selling products could take up costs your business money.
2. Parts Shortage
If you’re constantly running out of supplies, your auto parts inventory management system is failing. Good parts management requires staying ahead of the curve to anticipate the needs of your shop.
If you are always running out of parts and having to order them before you can complete a job, jobs will take longer, you’ll wind up paying more for parts, and you may lose your customers’ trust.
3. You're wasting time finding parts!
Whether the problem is a shortage or overstocking, either way your shop is spending too much time managing inventory ineffectively! If inventory management has become a dreaded task at your shop simply because it takes so long to complete, it is time to upgrade your system.
Inventory management must be a smooth process if you want the rest of your shop to operate efficiently. If regular check ups on your auto parts inventory are taking too long, it is probably a sign of a larger underlying problem—disorganization.
Own Your Parts Inventory With a Cloud-Based Shop Management System
You can’t run a shop without the right parts and tools, and in today’s automotive industry. Cloud-based shop management systems not only simplify your shop's operations, they even make it easier to make more money!
1. Direct Integrations with Parts Vendors
With immediate access to your favorite vendors directly inside Tekmetric, service writers can instantly find what they need.
Even better, because you an integrate multiple vendors, your shop can compare prices to get the best deal, and place an order in a matter of seconds.
2. Complete Inventory Management - From Anywhere
Track the flow of parts in your shop with Tekmetric's Inventory that connects to repair orders, estimates, and more. If you don't have a part in stock while working on a car, quickly swap the part for a similar one in inventory.
And because your shop management system is in the cloud, you can access your shop's parts inventory and do everything you could in your shop right from your phone or tablet. Literally, you can log in from anywhere in the world you have an internet connection to gain complete access to your shop remotely.
3. Create parts matrices to apply the right mark-up every time
By building streamlined process for marking up parts, shops can ensure grow your shop’s profit margin while staying fair to customers.
Fine Tune Inventory Management with Tekmetric
Whether you need to track down a stray steering column or make a decision about how much to invest in A/C repair parts for the summer, Tekmetric is your go-to system for gaining a better understanding of how parts move through your shop.
From what we see, there’s a lot that shop owners get right. They understand how to lead their teams, grow their shops, and bring trust and transparency to their customers. But as a former trainer and franchise performance specialist, I do notice a lot of little inefficiencies that add up.
Tekmetric touches every part of running your shop -- from managing customer information and measuring business metrics to facilitating digital vehicle inspections, repair order workflows, and even payment processing.
There are many reasons you might want to sell your auto repair shop.
You might be ready for another venture; you might be trying to fund your retirement; or you might just be curious about the value of your business if you do decide to sell.
Whether you're actively in the market to sell your shop, or you just want to know how to value an automotive repair shop just in case, you’ve come to the right place.
How to value your auto repair shop
The industry standard for establishing a sale price for an automotive repair business is to use total owner benefit (TOB) multiplied by four (or TOBx4).
So, if you took home an average of $50,000 a year for the past three years, the price of your business will likely be valued around $200,000. Keep in mind this TOB value does not include property value.
For those who are reading this with the hopes of selling in the near future, that valuation method might seem low to you. And it is.
The good news is that you can go above and beyond the industry standard, and sell your shop for a higher value, if you stay on top of your numbers.
Not only will diligent reporting and good customer service increase your TOB, but you’ll also have more leverage when negotiating offers from buyers.
Here are three steps you can take to improve the valuation of your business and secure the money that you worked hard to earn.
Your automotive shop is the beating heart of your business. A well-designed basic auto shop layout can streamline operations and refine your business.
When you plan to refresh your auto mechanic shop, consider how to make efficient use of your available space, enhance safety, refine the look and feel of the shop, and improve customer comfort. Most of all, upgrading the technology that forms the backbone of your business is a major component of a modern auto shop.
Manage space effectively
No matter how much square footage your shop has, you can maximize your layout to house everything you need. Consider the size and shape of your space before you commit to a specific layout. Evaluate the services you currently or intend to provide so you can plan your space safely and efficiently.
Some of those considerations include:
Equipment locations: Look at your permanent installations, such as lifts and compressors as well as movable items.
Storage: Organize storage areas so parts and equipment are easily accessible and tidy, both making them easy to find and improving your shop’s appearance and parts storage.
Working areas: Set up your workbenches and counter space so technicians can perform detail work away from the vehicle.
Loading bays: Verify your loading bay areas have adequate clearance.
Waiting rooms: Design an appealing spaceso your customers have a clean, well-lit, and comfortable place to wait.
Administrative offices: Make sure your employees have all the tools they need to keep the business running efficiently.
Effective space management also plays a big part in keeping an auto shop safe.
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