Parts Management: Save Time, and Money With FMIS
Is your parts management program – or lack thereof – costing your fleet operation money? Parts typically account for about 30 percent of your fleet maintenance and repair spend so managing this activity is critical.
Your parts program can be adding additional expenses if any of the following is happening:
- You have obsolete parts sitting on your shelves.
- You don’t have an accurate inventory, leaving you without needed parts in stock.
- You have too many infrequently used parts taking up shelf space.
- Your parts room is disorganized, and technicians are wasting time trying to locate parts.
- Your inventory process is taking too long to complete.
- You have outdated contracts with parts vendors.
Stop wasting money on unused parts and expedited shipping costs – not to mention extra technician labor. Instead, remedy these issues by improving your parts management program.
Improve Your Purchasing System
One of the first things you can do to revamp your parts management program is look at how much you are spending on parts. Check your current contracts with your parts vendors. When is the last time you renegotiated prices? Or when did you last shop around for a better deal?
When Jeff Jenkins took over as CEO of a trucking operation, he discovered that none of the company’s vendor contracts had been renegotiated for 20 years. It’s understandable how this happens – we fall into a comfort zone with vendors where it’s easy – and takes less time – to just stick with the current vendor (even if you know you are overpaying).
However, this can be very costly for your operation. One of the contracts that Jeff renegotiated was the company’s tires contract. He opted for a less expensive tire that cost about one-third of the price they were previously paying. Was the cheaper tire the same quality as the more expensive tire? No, but it was still a safe alternative, and the quality difference did not justify the current price they were paying. That one change saved the company a little over $1 million annually.
Keep an Accurate Inventory
Performing regular inventory counts will ensure fleet operations have an accurate accounting of how many of each part are on hand. This can alert operations to which parts need to be reordered, identify where there are too many parts on the shelves, and prevent inventory “shrinkage”.
To keep inventory updated, it’s important to perform it regularly using standard cycle counts. Using barcoding tools can help fleet operations perform inventory quickly and often. Also, after creating tags for each part, employees can easily scan the parts out of inventory into work orders using barcode scanning tools.
Monitor Parts Inventory Turns
Ideally, fleet operations should turn their entire parts inventory at least four times a year. If you’re not turning your inventory over as often as you should be, it can be a signal that you are stocking the wrong parts. This can include keeping obsolete parts on shelves or ordering a surplus of some parts.
These obsolete parts are taking up valuable real estate on your parts shelves. Getting rid of these can improve the accuracy of your inventory, free up much-needed space, and lower the cost of parts on the shelf.
Use Forecasting and Reporting
It’s important to know how your operation typically uses certain parts when determining how to manage your spare parts inventory.
Looking at your fleet’s maintenance and repair reports and historical data can help provide the needed inventory information. Tracking how long parts typically last (i.e., predictive analytics) and which brand has the best performance can be useful when deciding how often to restock your inventory.
Reports can also be used to determine the downtime a piece of equipment would endure if a particular part was out of stock and needed to be reordered. This can alert you to how many of a certain part you should keep on hand. If you do need to restock a part, knowing its importance can also help you decide which parts should be sent via expedited delivery and which can wait for standard delivery services.
Organize Your Parts Room
When your technicians look for items in the parts room, how long does it take to walk to the parts room and locate them? The parts room should be a primary adjacency to the maintenance shop to reduce time and effort to retrieve parts. Every minute they spend walking to the parts room or digging through shelves to find a part is additional time it takes them to complete the work order – and the longer the vehicle is off the roadways.
Fortunately, there is a solution – organize your parts room. Some tips for doing this include:
Keep Parts off Floor, Aisles or Walkways
For both safety and organizational purposes, parts should not be stored on the floor or in areas where staff members walk. This will help prevent employees from tripping over parts.
Instead of storing parts on shelves separately, place them in boxes and bins to keep shelves organized. Single parts are more likely to get lost or combined with other types of parts. Keeping items in boxes and bins will help parts be easily grouped and quickly located. Your fleet operation can choose how to organize the bins, if you want to group them by part type, manufacturer, or another convention that works best for your day-to-day needs.
Label Rows, Shelves, Bins
To help employees quickly locate parts, all rows, shelves, and bins should be labeled with an organized structure. A potential structure could use the following: letter for row, numbers for shelving section, shelf number and bin number. For example, A5-3B4 would be in row A, on the fifth shelving section, on the third shelf, in bin 4. This will also help when it comes time to perform physical inventory counts.
Designate a Special-Order Shelf
To keep special-ordered parts easily identifiable – and to ensure they are not mistakenly used on another job — a shelf should be designated for them. Parts can also be tagged with a twist tag to note the vehicle number and Work Order ticket the part has been ordered for.
Designate a Warranty Shelf
Parts that are being replaced under warranty should be kept in a separate area. This will help staff know not to use them on other vehicles. Like the special-order items, these parts can also be tagged with a twist tag to note the vehicle number and Work Order ticket.
Label a Core Shelf
Parts rooms should have an area marked and labeled for core parts returns. Staff members can make a note on each part to state when it is to be returned and reference the Credit Purchase Order.
Create Clear, Descriptive Naming Conventions for Parts
Your fleet operation should determine a naming convention for all parts, so items are labeled consistently. This will help when taking inventory, ordering new parts, and looking for items in the parts room.
Assign a Dedicated Staff
After you put all the work into organizing your parts program, you need to make sure it stays efficient. If your maintenance operation is large enough, this is a great way to have ownership and accountability added to your parts inventory. This can include a parts manager and parts clerk, and other roles as needed. These individuals can oversee ordering parts, negotiating with vendors, taking inventory, keeping the parts room organized, helping technicians locate parts, and other tasks to keep the program running smoothly and to keep the technicians on the shop floor turning wrenches, not searching for parts.
Use Fleet Management Software
Fleet management software can help fleet operations monitor their parts inventory and help alert operations to when parts should be reordered.
Barcoding tools can be connected to fleet management software solutions, allowing fleet operations to update their inventory directly into the software and reduce the chance of data input errors.
Operations can also set up parts to automatically re-order using min/max reorder points when the inventory hits a certain threshold. So, for example, if the re-order trigger was set to two, each time the inventory dipped below two the system would automatically re-order a pre-determined number of that part. This helps operations ensure they have enough on hand to not run out, and yet not overstock the part.
Running an efficient parts management program requires the knowledge to know what’s the magic number of parts to keep in your inventory. Determining this can be done through the classification of inventory, forecasting, preventive maintenance, and implementing fleet management software. It will also help you track performance of the parts operation and report on key parts management metrics such as part inventory turns, stock versus non-stock issues, parts value on hand per vehicle equivalency unit, obsolete parts value, etc.
Organizing Your Parts Management Program Can Save You Money
Taking the steps to create an organized parts management program can make your fleet more efficient, and help you save money. A parts management program can help you keep the right parts on your shelves, take inventory faster, and organize your parts room to let technicians quickly locate parts.
To learn how RTA’s fleet management software solution can improve your parts management program, schedule a free demo today!
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