Aftermarket

Inventory Control: High-Tech Ways to Manage Parts Flow

October 2011, TruckingInfo.com - Feature

by Jim Beach, Contributing Editor, Technology Editor - Also by this author

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For anyone selling truck parts, managing inventory is the most basic part of the business. Automated inventory systems have been in use in the aftermarket business for years
Improvements in software and hardware used for inventory management have made it easier for distributors and shops to stay on top of trends in parts sales.
Improvements in software and hardware used for inventory management have made it easier for distributors and shops to stay on top of trends in parts sales.
, but today they are incorporating new technology such as smartphones and Web-based software.

These systems can tell you things such as how many units you have in stock, what items are selling and which ones are collecting dust, how much you paid for the parts, and which vendors supplied the parts.

For repair/service shops, inventory systems should tell you what parts are on hand or need to be ordered for each job. If the parts are not in stock, many systems will generate a purchase order for that part and automatically place an order for the part.

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For instance, Pluss Corp., Columbia Falls, Mont., offers PTM Vision for shops and parts distributors. For shops, the software can order parts and then track the vendor supplying the part, delivery date and price. Once the part is received, the system updates the work order and an invoice is generated that updates the payables module in the accounting system.

An inventory control system can also generate reports showing trends in parts sales, ranging from seasonal demands to overall demand over time for specific parts. This information helps ensure proper stocking levels for popular parts when they are most in demand.

Improvements in software and hardware used for inventory management have made it easier for distributors and shops to stay on top of these issues. These include more affordable bar code technology, which ensures more accurate receiving, order picking and shipment verification.

Latest technology

Maintaining correct stocking levels is an important part of any system. Warehouse operations want to have plenty of parts on hand to meet customer needs, but they don't want to tie up a lot of money in parts that aren't moving. To make sure parts are available when a customer needs them, software uses exception alerts. For instance, AutoPower's alert, called Business Alert Messaging, sends an alert to warehouse personnel and management whenever stocking levels of a particular part get to critical levels, so the distributor knows immediately when there is an inventory problem rather than when they run an end-of-day report.

Smartphones are also playing a role in the parts business. Software such as AutoPower includes smart phone applications that track parts delivery drivers via GPS. Smartphones can also be used to capture signatures when parts are delivered, which speeds up the invoicing process.

Karmak, Carlinville, Ill., introduced a smartphone app called Attach-It in November that attaches photos from the smart phone to sales and repair records. Attach-It is integrated with the device's camera to quickly add pictures to the business system without transfer cables.

Karmak also offers PartsDirector, an inventory management software package that is part of its DS product line. Designed for single- or multiple-warehouse parts distributors, the system tracks sales, generates day-to-day cycle counts and detailed profit analysis reports. Karmak's Client Talk automated communications software was recognized last year by HDAJ as one of the top five aftermarket products of the year. The software, which is fully integrated with the parts and service modules of Karmak's business management system, automatically sends email messages to shop or warehouse customers when repair work is finished or back-ordered parts arrive.

Icas Computer System, Dover, N.J., offers the PaceSetter inventory control software suite designed to operate on any operating system. PaceSetter is an open system that can be used with various report/data mining software for management needs. Data can be exported to or imported from other applications.

The state of VMI

Many large warehouse distributors and marketing groups have adopted vendor managed inventory systems that set up a link between the distributors and the parts manufacturers. In this kind of arrangement, the VMI system takes on the job of making sure a warehouse/distributor customer has the correct level of a manufacturer's parts in inventory by monitoring that inventory and generating automatic orders. Instead of the warehouse sending purchase orders to a supplier, it electronically sends a daily report outlining products sold, products left on-hand, products returned, etc. to the VMI facilitator. The VMI provider then uses specially designed algorithms to evaluate the data in the report and generate an order for the customer based on previously agreed upon stocking levels, order amounts, transaction costs and other factors. This order is then sent to the warehouse distributor for approval.

A few years ago, many in the industry thought VMI systems would be widely adopted by parts warehouses, but the going has been slow, according Michael Mallory, president of AutoPower.

"VMI has had a slow adoption rate. I think today, many distributors and buyers are not fully convinced of its payoff. While several of our Auto­Power users have deployed VMI, the promised results have not been realized. There's a way to go before buyers turn over their inventory replenishment responsibilities to VMI."

On the web

Mallory also noted that some small operations don't meet volume requirements for some electronic transactions such as VMI, and many of these smaller outfits lack the IT resources for such systems.

To address this issue, Datalliance, Cincinnati, offers a VMI service that is a Web-based software as a service, or SaaS, application. Because it is delivered via the Internet rather than a product the end user installs on his or her computers, it requires no extra IT staff or equipment to support.

Also on the Web, software providers offer e-commerce solutions that allow the customer of a distributor or service shop to order parts or make service appointments online.

AutoPower's WebPower e-commerce product allows a warehouse's customers to access real-time inventories 24/7 over the Internet. Inventory specials and promotions are shown up front on the initial landing page. Buyers can see previous invoices from history, or A/R balances and their unpaid invoices.

Some of these systems may be offered as cloud-based computing products in the future, according to Dick Hyatt, president, Decisiv, Glen Allen, Va. Decisiv provides a software platform that connects fleet maintenance managers with internal and external service locations and parts and component manufacturers. Working primarily with dealership service locations, the company's service management module brings together information from a variety of locations, such as vehicle and warranty information from the OEM, parts catalogs from component manufacturers, vehicle repair histories and other information.

Hyatt calls cloud-based computing technology the next generation of these advanced information management solutions, enabling the integration and interaction between applications and database systems internally, as well as externally over the Internet - for example, between fleets, service providers and manufacturers.

"The key with cloud-based solutions is that the solution provider has already made the investment in hardware, software and operations so their customers don't have to," he says. And cloud-based services can be scaled up or down as business needs change.

"The integration of information management solutions is increasingly becoming a key part of the success of many operations for anywhere
/anytime access, real-time decision-making, off-line analysis, and back-office automation," Hyatt says.

Most software providers offering business management systems to the warehouse/distributor or repair shop market include an inventory management module as part of their offerings. Such systems are full-featured e

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