Why Match Parts from Repair Orders on Purchase Orders?

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March 12, 2024

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Read time: 3 min

The Art of Knowing Where Everything Is

In auto repair, there are many moving parts to keep track of—both the literal parts your shop uses to repair vehicles, and the parts of your business that determine your shop’s efficiency, security, and ability to grow. If you want your shop to flourish, it’s crucial to devote part of your business to keeping track of the parts you order.

Many shops track parts in terms of cost of goods sold. The parts you need for the job are included on every repair order, so it’s easy to see what parts your customers are paying for as long as you have a solid process for building repair orders.

But what about in terms of accounts payable? How does your shop track how much you’re spending for parts from the supplier?

Should You Use Purchase Orders or “Save Time?”

For your accounts payable, or determining how much you’ll owe your parts suppliers, there are typically two routes you can take:

  1. Wait for the parts bills to come in and trust that you’re being charged the correct amount, or
  2. Create a formal purchase order each and every time you order parts from a supplier.

The advantage of going with the first route is that you save a little bit of time; there’s no second step of reconciling the part you need to purchase on a purchase order. But the cons far outweigh this advantage—because this is where shops can start to lose money.

For example, your ROs may indicate that you have a 30% profit margin on parts, but if you don’t accrue your parts bill, you won’t know for sure if that’s the case until the parts bill hits your account. Suddenly, when the money gets taken out, your margins are razor-thin.

So, what happened?

Did a supplier charge too much? Were you double-charged? Was an unauthorized person ordering parts on your account? Was there theft?

It’s hard to tell if there is no paper trail or purchase order for you to look at.

If you’re not paying attention to your parts orders on the accounts payable side, you could be losing money, and it will typically take a large missing chunk of change for you to realize that something is wrong. Without a paper trail, figuring out the problem is not only difficult but also extremely time consuming. Once you notice that there is a loss you can’t account for, all the “time saved” by skipping the purchase order step comes back in the form of time spent trying to figure out the issue.

By reconciling your parts orders on both repair orders and purchase orders, you can easily check to see what’s going on, protecting your shop from incidents where you are losing money due to overages, slip-ups, theft, and overcharges.

How to Build a Better Parts Ordering System

When it comes to tracking parts on repair orders and purchase orders, consistency is key. Shops that have strong, consistent processes and procedures—and follow them every single time—rarely have issues with leakage and theft; they instill habits in their team to keep careful track of all parts.

As long as your shop has a repeatable process for adding parts to repair orders and putting in purchase orders, you will be able to quickly identify any issues as soon as they crop up. Every service advisor and employee that orders parts and builds repair orders for customers should use the same method for filling out repair orders, creating purchase orders, and inputting this information into your shop management system and accounting system.

Create a standard process for each of the following:

  • How jobs get posted
  • How repair orders are built
  • How repair orders are approved
  • How parts orders are posted
  • How purchase orders are written and sent to suppliers
  • How purchase orders are approved
  • How parts and purchase data get analyzed

Instill Parts Ordering Best Practices with Tekmetric

Standard procedures for ordering parts and creating repair orders are built into Tekmetric. We give shops the tools and guardrails needed to effortlessly track parts throughout each step of the repair process.

From our intuitive repair order builder to our integrated parts ordering and inventory systems, we aim to align your team so that no money slips through the cracks. And our industry leading analytics and reporting tools allow you to keep track of your shop’s financial history in realtime.

This article was written with the guidance of automotive repair industry
CPA Hunt Demarest of
Paar, Melis, & Associates, P.C.

👉 Ready to grow your automotive business? [Book a personalized Tekmetric Demo Here]

FAQ

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When researching digital vehicle inspection software solutions, you should look for these seven core features that benefit your team and your customers:

  1. A searchable DVI history
  2. The ability for technicians to attach photos and videos to inspections
  3. A color-coded system that indicates the severity of inspection findings
  4. A direct tie-in to parts and labor data when building estimates
  5. The ability to add canned jobs when building estimates
  6. Digital authorization
  7. Automatic saving and tracking of declined jobs

1. Searchable DVI History

When shopping for digital vehicle inspection software, make sure that you can easily look back on past inspection findings. When service advisors are able to quickly find out what was uncovered during previous inspections, they’re less likely to miss a repair opportunity and leave money on the table. They can simply pick up where they left off, helping your shop sell more repair work.

2. The ability for technicians to attach photos and videos to inspections

It’s one thing to tell a customer, “Hey, your car has really bad engine corrosion.” It’s another thing to show the customer a photo of the orange, brittle-looking rust all over their engine. When customers can see what’s really going on with their vehicles, they’re more likely to trust your team’s word and authorize repairs right then and there. They’ll be less inclined to shop around for a second opinion or tell you, “Oh, I’ll sleep on it and come back tomorrow.”

A digital vehicle inspection software that enables technicians to quickly attach photos and videos will help your team keep repairs moving along and build customer trust.

3. A color-coded system that indicates the severity of inspection findings

When explaining repairs to customers, the best route is often the simplest one. Instead of spending time speaking or writing about the intricacies of each inspection finding, service advisors can leverage digital vehicle inspection software that uses a simple, color-coded system to instantly give customers an idea of how urgent each inspection finding is. For instance, an inspection finding marked in green would indicate that everything is good to go, one marked in yellow would indicate something that might need attention down the line, and red would indicate the need for immediate action.

4. A direct tie-in to parts and labor data when building estimates

It’s vital for service advisors to weave in the right parts and labor data when building estimates. But doing so manually is a tedious process. With everything going on, service advisors might accidentally scribble down the wrong piece of information, resulting in the customer getting the wrong parts and labor pricing, or inaccurate parts availability.

Digital vehicle inspection software with a direct tie-in to parts and labor data helps service advisors create accurate estimates from the get-go, so there are no unpleasant surprises for anyone at the shop come estimate-review time.

5. The ability to add canned jobs when building estimates

On a daily basis, service advisors may find themselves writing the same types of findings on estimates over and over.

Digital vehicle inspection software with a canned jobs feature will eliminate a lot of this repetition by enabling service advisors to add pre-saved jobs to estimates in a matter of seconds. That way they can complete inspections faster and get estimates in customers’ hands as soon as possible.

6. Digital authorization

The easier you make it for your customers to authorize repair work, the more likely they’ll quickly do so. That’s where digital vehicle inspection software with digital job authorization steps in. Service advisors won’t have to track down customers to get their verbal or written approval to start repair work. Instead, customers can approve or decline individual jobs from the moment they get their estimate.

7. Automatic saving and tracking of declined jobs

Some repair work is going to get declined for various reasons. But don’t worry. Declined jobs show that your shop is thorough with inspections and estimates; your team caught every budding and existing issue with each vehicle. Think of declined jobs as future business opportunities for your shop.

However, remembering and keeping track of declined jobs can get tricky with a pen and paper method. Service advisors might totally forget about these opportunities, or if they remember, they’ll have to dig through stacks of paper or navigate folder after folder on a computer just to find the right estimate.

Digital vehicle inspection software that has a “declined jobs” feature enables your service advisors to pick up right where they left off the next time a particular customer walks into your shop. They’ll be able to search which jobs the customer declined last time, and recommend taking care of those issues. The results? You’ll get more business and impress your customers with your great customer service.

As a shop owner, you have the ability to tune into your shop’s performance metrics, employees’ bandwidth, and overall profit margins with a few clicks.

Lucas Underwood and David Roman, hosts of the ASOG podcast, recently sat down with Tekmetric CEO Sunil Patel at the Vision Hi-Tech Training and Expo in Kansas City, Kansas.

Sunil shared some key insights into facing challenges, embracing change, streamlining processes, prioritizing customers, and the power of “always starting with why.”

Note: the following answers have been condensed for clarity.

On Facing Challenges and Handling Stress

ASOG: We spoke with PJ Leslie (Tekmetric’s Business Development Director) recently, and he was talking to us about your ability to take anything that comes your way and overcome it.

PJ shared with us that no matter the circumstance, you’re always able to say, “We’re going to get through this, and we’re going to make something from it.”

You created an amazing thing despite the adversity that you’ve faced. How were you able to do that?

Patel: My wife and I went through some hard times with our daughter, Brianna, about a year ago.

And what I told my wife during that time was, “You know what? I’m ready to face this challenge.

We’re going to find the best doctor we can find and the best solution for her. And Brianna will live life one day at a time.

We’re not going to think about the future, we’re going to live life today.”

Since that day it’s been almost ten months and everything has been great. She’s doing beautifully.

A key component to handling stress is delegation.

You’ve got to let go of some of your responsibilities no matter how unnerving it is. Remind yourself that you can continue to keep your momentum on your shop, business, and goals by delegating.

That’s why you have a team—so you can tackle and conquer each task that comes your way.

On Embracing Change and Switching Gears

ASOG: You’ve gone from being a physician to a police officer to an auto repair shop owner, and now you’re the co-founder and CEO of Tekmetric. What made you want to go from physician to shop owner?

Was there a rock bottom for you? Was there a point where you decided, “I don’t want to be a physician any longer?”

Patel: I was fortunate that I never hit rock bottom. I’ve always tried to live in the moment. And I’m always intrigued by learning new things. With that being said, it took me going from industry to industry to learn the skills that helped form Tekmetric.

Let’s say you set a goal for yourself to go to the gym more often.

Now, if you don’t want to go to the gym, then you will keep training your mind to make sure that gym is just not your thing. It’s not until you have a breakthrough that you are able to change your mindset.

You have to train your reticular activating system (RAS), a network of nerve pathways located in the brain stem that mediates overall behavior, so that going to the gym becomes a positive activity.

Along with reminding yourself that you want to go to the gym, write down when you want to make the change and why.

Let’s say this is your goal, 'In March 2023, I will feel great, I will look great, my clothes will fit me better, and I can hear my family and friends saying ‘You’ve done a fantastic job.'

You have to recognize and reframe each limiting belief that is preventing you from achieving your end goal. An example of a limiting belief would be something along the lines of, "Ah, I’ve had a long day, I can just go to the gym tomorrow.' You have to reframe it to, 'I’ve had a long day, time to finish strong with a trip to the gym.'

You have to be very intentional. You truly have to want to reach the finish line.

This concept goes for shop owners, too. If you’re wanting to expand your shop, you’ll need to change the way you’re running your business. You can do that with shop management software.

Transforming the Shop Owner Experience with the Right Tools

March 24, 2022

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The answer to that question depends on a number of factors, and getting the right categorization for each part is crucial for maintaining healthy profit margins while minimizing the risk of rush orders and frustrated customers.

Inventory and Stock Management to Minimize Complexity

When you and your team are replacing parts during repairs, it’s important to consider what parts you have on hand versus what parts you’ll need to order.

If you don’t, you risk overstocking and sinking money into too many units of a particular type of part, or understocking and making a customer wait while you hope that the expedited shipping for a part pulls through.

By having the right inventory and stock management processes in place, you can make it easier for your service advisors and technicians to avoid frustrations.

Here are some best practices for inventory and stock management at your auto repair shop.

Inventory Management Best Practices for Auto Repair Shops

May 22, 2023

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