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:
Wait for the parts bills to come in and trust that you’re being charged the correct amount, or
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. Withouta 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.
No matter what your auto repair shop specializes in, chances are you're facing similar challenges.
New customers are hard to come by
It can be difficult to keep even the most loyal customers coming back
Repair work is frequently declined or pushed off
The reality is, people don't want to have to pay for an expensive fix when they don't directly see or understand the value or necessity behind the repair. We've become very used to simple solutions to complex problems, and more often than not customers wish their cars were like that too.
Auto repair shops can also be intimidating: they're loud, usually covered in oil, and they can feel like a trap.
That's why transparency is so critical in the auto repair industry, and why digital vehicle inspections have become such an important tool for shops. Customers want to know that they're only being charged for necessary work, and digital vehicle inspections help your shop show them that.
Digital vehicle inspections are just one aspect of your entire shop's workflow, but are an incredibly powerful foundation that go a long way in making your shop more money.
When customers walk into your auto repair shop, they’re trusting you and your team with the health of their vehicle, one of their most expensive assets.
They’re coming in with a problem or set of problems and expect your team to effectively fix those problems in a reasonable time frame.
And modern expectations for customer service have shifted as our technology has evolved. Customers don't want to have to find time for a phone call when they can just get texted updates about their repairs, and digital tools make it easier for shops to build transparency in their process.
Modern auto repair shop software not only makes it easy but lays the foundation for a modern customer experience at every step.
Offering a Modern Auto Repair Shop Customer Experience Starts with a Modern Shop Management System
We're big advocates of modernizing your auto repair shop, and we don't necessarily mean replacing all your racks, updating all your compressors, and swapping out your alignment rack. Sure those might help, but we get those can be really big investments.
That's why we're focused on the behind-the-scenes operations of your shop, the overall management and flow of repair orders. Modern shop management software enables owners, managers, service advisors, and technicians to gain visibility into, and control over, their individual part of the process with specific functions:
Cloud-based shop management
Real-time control
Digital Vehicle Inspections
Built-In Payment Processing
Digital Shop Communications
Efficient Parts and Inventory Management
While all of these directly work to modernize your shop operations, they also work to modernize your shop experience for customers.
When your shop is using Digital Vehicle Inspections instead of paper printouts, you're not only making it easier for your technicians and service advisors to communicate and collaborate, but you're also modernizing how your shop interacts with customers, by emailing or texting results and approval requests.
It is often said that “a picture is worth a thousand words.” When it comes to vehicle inspections, you could even say a photo is worth a thousand happy customers. Digital vehicle inspections (DVIs), complete with photos and videos, give your customers a clear picture of their vehicle’s status and empower them to make well-informed decisions regarding repairs. This not only enhances the customer experience but also fosters a culture of trust and builds long-lasting relationships. Take a look at three ways DVIs can drive growth and success in your shop:
1. Fostering trust with photos and videos of repairs for approval.
Digital vehicle inspections provide the clearest way your associates can tell a customer what you found within their vehicle and the possible solutions. Using the media the technician captures, the vehicle owner is empowered to make a knowledgeable decision based on your technical knowledge and experience.
Sending the customer six to eight photos and videos more than 50% of the time leads to a higher ARO. Not sending enough photos and videos may not give the customer enough information on the health of their vehicle. Conversely, too many images and videos can overwhelm the customer. Capturing the full state of the vehicle with just the right number of photos and videos facilitates a culture of transparency and builds trust with customers, enhancing their experience and leading to more repeat business.
2. Proactively monitoring overall vehicle health.
“I should only get my car inspected if something seems off.” Wrong! A great way to view DVIs is to think about them in terms of overall vehicle health. A thorough DVI can not only provide insight into the customer’s original complaint; it can also give you a full picture of other issues that might be impacting the vehicle or will in the future. Just as you might need blood work and X-Rays for a correct diagnosis from your doctor, a DVI done correctly can provide insight into the health of your vehicle and help technicians make strong, educated repair recommendations.
Completing a routine “check-up” with DVIs can verify if the vehicle is in top-notch shape or proactively identify issues a customer might not see. Even if a customer does not want regular check-ups, technicians can still complete a thorough DVI when the vehicle comes in for repairs and potentially prevent further issues down the road. DVIs go beyond simply making a profit. They are a tool used to build a relationship with customers and ensure their safety on the road.
3. Educating the customer with convenient, easy-to-understand explanations.
DVIs seek to leave no questions unanswered. When vehicle owners are presented with the option for a repair, they need to know two things: information about the problem and the benefits of the repair. This is where DVIs come in as an opportunity to educate the vehicle owner and give them the information they need to make the right decision.
With Tekmetric’s MotoVisuals integration, the recommended repairs in a DVI are accompanied by educational videos and animations that give more context to the issue and how the technician’s proposed repair can benefit the vehicle owner. This provides a greater understanding of the repair process for your customers – they can even share the videos with a car-minded partner or friend for a second opinion. By educating the customer on the purpose of a repair, it gives them more confidence in your shop.
Ultimately, DVIs lead to a higher close ratio and ARO because they present the information in a transparent manner that leads to greater trust. When vehicle owners can see the why behind their repairs and understand the value of the solutions you are offering them, they’re more likely to return. As a result, you are setting your shop to experience increased customer retention, stronger relationships with your customers and ultimately, greater profitability.
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