{"id":12228,"date":"2021-08-27T16:51:46","date_gmt":"2021-08-27T14:51:46","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=12228"},"modified":"2021-08-27T16:51:46","modified_gmt":"2021-08-27T14:51:46","slug":"parts-inventory","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2021\/08\/27\/parts-inventory\/","title":{"rendered":"8 Ways To Better Manage Parts Inventory"},"content":{"rendered":"

Photo:\u00a0Halvor Lines<\/i><\/span><\/p>\n

To really manage your parts inventory, you need data.\u00a0<\/b><\/span><\/p>\n

The trucking industry is seeing a parts shortage. Although it started with the truck makers having trouble sourcing computer chips and other parts and components for their assembly lines, it is now rolling into the aftermarket, and fleets are experiencing wait times for replacement parts needed to complete maintenance service or repairs.\u00a0\u00a0<\/span><\/p>\n

Having a truck waiting for parts is expensive. Each day of downtime costs a fleet $800 to $1,000, according to industry estimates.\u00a0<\/span><\/p>\n

It\u2019s more important than ever for fleets to carefully manage their parts inventories. This helps ensure they have the right parts in stock when they need them. Good inventory management also means they won\u2019t have unneeded parts in stock that will never be used.\u00a0<\/span><\/p>\n

Here are a few simple rules that will help fleets manage their inventories more effectively and even help them weather parts shortages.\u00a0<\/span><\/p>\n

1.\u00a0Use VMRS\u00a0<\/span><\/h2>\n

To successfully manage a parts inventory, fleets need data. That\u2019s where Vehicle Maintenance Reporting Standards<\/a> come in.\u00a0<\/span><\/p>\n

\u201cManaging inventory is easier if we can use VMRS coding of all types of information,\u201d says Pete Russo, senior vice president of product strategy and innovation for\u00a0Decisiv, a provider of asset service management. VMRS codes \u201cnormalize data,\u201d he says.\u00a0<\/span><\/p>\n

The use of VMRS codes establishes standard part numbers regardless of the dealer or distributor the fleet uses to procure parts or the make and model of the vehicle.\u00a0\u00a0<\/span><\/p>\n

\u201cThis makes it possible to more easily source needed parts,\u201d explains Paul Reynolds, parts consultant and senior product expert at Karmak, a provider of transportation software, including parts-management systems.\u00a0<\/span><\/p>\n

Russo adds, \u201cAnyone who comes from the data world will tell you that you have to have some standards so you can compare information.\u201d\u00a0<\/span><\/p>\n

2.\u00a0Record\u00a0all data\u00a0<\/span><\/h2>\n

With VRMS codes as a base, all data related to maintenance and repair events needs to be gathered in one place so a fleet can see all the parts it has ever used.\u00a0\u00a0<\/span><\/p>\n

\u201cYou need to know what you have, where it is at, what it cost, what you are using, and what you have on order,\u201d Reynolds says.\u00a0<\/span><\/p>\n

In addition to capturing information on the parts used, also include information on the vehicle year, make, model, engine, and the number of miles or engine hours.\u00a0<\/span><\/p>\n

Also include the reason for the repair. Was it just a maintenance service, or was there a breakdown? Russo cautions, however, that including accident repairs may skew the data, as those are unplanned events.\u00a0<\/span><\/p>\n

Maintenance records and vehicle makes\/models are key data sources that can help a fleet keep rolling, says Terry Livingston, senior director of OEM and fleet sales at Meritor. \u201cKnowing the age, miles driven per year, warranty coverage, and repair intervals for each vehicle will allow a fleet and their distribution partners to determine inventory and parts needs.\u201d\u00a0<\/span><\/p>\n

He says the repair process can be broken into two categories: wearable components and breakable components.\u00a0\u00a0<\/span><\/p>\n

The wearable components include braking components, for instance. \u201cThese wearables can be predicted, and their replacement is often time-based,\u201d Livingston explains. \u201cThis can help in the predictability of service and the need for inventory.\u00a0\u00a0<\/span><\/p>\n

\u201cThe breakable components include engines, drivetrain and drivelines. These are often sudden issues, and fleets should work with their distribution partners to have a plan and a process in place to have the parts in the shop within 24 hours or less to get the vehicle operating.\u201d\u00a0\u00a0\u00a0<\/span><\/p>\n

Karmak\u2019s Reynolds stresses the importance of \u201crecording accurate demand history on all parts you are using.\u201d Remember to account for lead times so they reflect current trends. Fleets may have to adjust order frequency and days of stock to maintain reasonable stocking levels during shortages.\u00a0<\/span><\/p>\n

3.\u00a0Make\u00a0records clean and accurate\u00a0<\/span><\/h2>\n

Fleets should maintain clean and accurate computer inventory records.\u00a0\u00a0<\/span><\/p>\n

\u201cPart numbers need to be formatted consistently and match vendor\u2019s part numbers,\u201d Reynolds says. \u201cVMRS numbers need to match VMRS standards. Quantity on hand and quantity on order need to match what is on the shelf plus open purchase orders. Part numbers need to have current bin locations. Costs need to be correct.\u201d\u00a0<\/span><\/p>\n

Fleets also need to regularly perform a physical inventory count.\u00a0\u00a0<\/span><\/p>\n

\u201cWe preach the importance of counting fast-moving parts weekly at least on a monthly basis,\u201d says Jacob Findlay, founder and CEO of Fullbay, provider of heavy-duty truck repair and shop management software. Fleets need to determine the number of days of stock they have for each part.\u00a0\u00a0<\/span><\/p>\n

\u201cThis is a simple math formula where if you use a part 10 times in a month, and\u00a0your\u00a0in-stock quantity of that part is 10, you have a one-month supply on hand,\u201d Findlay explains. \u201cIf you have 20 in stock, you now have a two-month supply on hand.\u201d\u00a0<\/span><\/p>\n

However, he cautions fleets to be careful not to stock too much.\u00a0\u00a0<\/span><\/p>\n

\u201cThe carrying cost of parts is upwards of 15% to 20% annually. You don\u2019t want to start spending all your cash on inventory that has a negative ROI to it.\u201d\u00a0<\/span><\/p>\n

In addition, Reynolds advises fleets to \u201cpost parts to repair orders as soon as they are pulled from inventory, so demand is current.\u201d Also note parts that were needed for a repair but were not in stock. Monitor open purchase orders and close them once the parts are delivered to ensure there is an accurate record of what is on order.\u00a0<\/span><\/p>\n

4.\u00a0Set\u00a0minimum\u00a0stock levels\u00a0<\/span><\/h2>\n

Each fleet should have a proactive plan to have critical parts on hand during good times and bad, according to Livingston.\u00a0\u00a0<\/span><\/p>\n

\u201cThis minimal stock level will ensure against issues of the day, which will lead to more productivity and greater uptime for vehicles,\u201d he says. \u201cWork with your distribution partners to determine those critical parts needs and minimal level you should have. This inventory should be customized to your in-service vehicles.\u201d\u00a0<\/span><\/p>\n

5.\u00a0Forecast and\u00a0make\u00a0predictions\u00a0<\/span><\/h2>\n

Two or three years ago, it was possible to look at the data captured from maintenance and repair events and spot breakdown trends. Today, thanks to artificial intelligence and machine learning, it is possible for fleets to look beyond trends to forecasting and predicting parts needs based on more variables.\u00a0\u00a0<\/span><\/p>\n

\u201cAI and machine learning allow fleets to take different variables into account and come up with better predictions about what parts they are going to need and when they are going to need them,\u201d\u00a0Decisiv\u2019s\u00a0Russo says.\u00a0\u00a0<\/span><\/p>\n

\"Work<\/span>
\n

Work with parts suppliers, such as dealers and distributors, that have the technology to find parts you need that aren\u2019t on their own shelves. Photo: Jim Park<\/span><\/p>\n<\/figcaption><\/figure>\n

Information about parts shortages can be one of the variables included in the analysis. This can drive decisions about whether to stockpile a part (if possible), look for alternative sources for the part outside the fleet\u2019s normal vendor list, or consider a different replacement part than what is usually used.\u00a0<\/span><\/p>\n

6.\u00a0Work\u00a0with vendors\u00a0<\/span><\/h2>\n

Parts vendors, whether dealers or distributors, can be a great asset in establishing ordering and delivery schedules.\u00a0\u00a0<\/span><\/p>\n

\u201cThere is a general idea in the aftermarket channel that inventory may not be on the shelves at [local] brick and mortar locations,\u201d says Daniel Griffin, senior director of aftermarket\/digital solutions at Dana Aftermarket. However, the reality is \u2014 that at least in some instances \u2014 the part may exist in other locations. New technology allows suppliers such as Dana to give customers visibility into other places where a part may be.\u00a0\u00a0<\/span><\/p>\n

\u201cFor example, we could have that part in one of our distribution centers or in our manufacturing location,\u201d Griffin says. Technology such as API is making it easier for suppliers to communicate that they do in fact have the part available somewhere in their network and can work to get it to the customer.\u00a0<\/span><\/p>\n

Fleets should consider working with vendors that can automatically communicate the location of the part they are looking for. It is best if this can be done in real time so that information is up to the minute.\u00a0\u00a0<\/span><\/p>\n

\u201cWhen you see that we have 50 parts at our distribution center and 12 at our manufacturing site, that is real-time information,\u201d he explains.\u00a0<\/span><\/p>\n

Fullbay\u2019s Findlay believes suppliers can help by\u00a0opening up\u00a0their stock levels to fleets. While some distributors have this information available on their websites, \u201cfor the most part we are still in the days of getting on the phone and asking, part by part, \u2018Do you guys have this?\u2019\u00a0\u00a0<\/span><\/p>\n

Today, he says, \u201cmodern APIs allow parts distributors to open up and share this information with the fleets. It is not just the parts distributors; it is the suppliers, too. The distributors tell the suppliers transparently exactly what is being used and when. The suppliers tell the distributors what is coming down the pike, what their forecasts are, and what they have in stock at their different warehouses. Distributors can then share with fleets what they have in stock at their various distribution centers.\u201d\u00a0\u00a0<\/span><\/p>\n

Findlay believes having this type of information about the entire supply chain is critical for fleets when making stocking decisions, especially about mission-critical parts.\u00a0<\/span><\/p>\n

7.\u00a0Start\u00a0small\u00a0<\/span><\/h2>\n

It can seem daunting to undertake a technology project, but\u00a0Decisiv\u2019s\u00a0Russo advises fleets not to bite off more than they can chew. \u201cStart small and build confidence and expertise off of one project,\u201d he says.\u00a0\u00a0<\/span><\/p>\n

For example, a fleet might pick a certain application, region, or make of truck to gather and analyze data about a limited set of vehicles. Once the fleet gets initial results, Russo suggests relying on an industry expert to tell them if the results make sense and to validate their findings. Once results have been validated, the fleet can be assured it is collecting the proper data in the proper form and can be comfortable expanding the scope of the project.\u00a0<\/span><\/p>\n

8.\u00a0Review\u00a0periodically\u00a0<\/span><\/h2>\n

Set-it-and-forget-it is not a good strategy when it comes to managing inventory. While it may initially be time-consuming to set up the database that allows the fleet to manage inventory, once it is in place, it becomes a simple matter of \u201creviewing it on a quarterly basis to look for exceptions and anomalies,\u201d Russo says.\u00a0\u00a0<\/span><\/p>\n

\"Needed\u00a0inventory<\/span>
\n

Needed inventory levels for wear parts, such as brake friction, can be more easily predicted, because replacement is often time-based. Photo: Paul Hartley<\/span><\/p>\n<\/figcaption><\/figure>\n

During a review, a fleet manager may notice that a certain type of breakdown is occurring more frequently, so stocking levels for parts associated with that repair may need to be changed. However, fleets should not have to make wholesale changes to what parts they keep in inventory and how many of each they have unless they make changes in their asset base.\u00a0<\/span><\/p>\n

Fleets also need to have some inventory controls in place to make sure \u201cparts are not walking out the door,\u201d Findlay says. \u201cThere are ways to minimize the 15% to 20% carrying costs through some common-sense fraud prevention controls.\u201d\u00a0<\/span><\/p>\n

In addition, if fleets are only keeping in stock the parts they\u00a0actually need, that goes a long way to reduce the carrying costs, \u201cbecause you have less obsolescence; you have less parts sitting on the shelf that never get used,\u201d Findlay explains.\u00a0<\/span><\/p>\n

However, in a time like this where there are constraints on the supply chain, fleets need to look at increasing their safety stock levels because the lead time to get parts may be extended.\u00a0\u00a0<\/span><\/p>\n

\u201cIf the lead time is same day, then you almost do not need to keep a lot of parts in stock,\u201d Findlay says. \u201cBut if the lead time becomes two days or a week or two weeks, then you have to look at keeping some in stock that you did not have\u00a0to\u00a0before.\u201d\u00a0\u00a0<\/span><\/p>\n

Meritor\u2019s Livingston says proactive management techniques, such as pre-positioned inventory, customized inventory, and working with OEM manufacturers and distribution partners, \u201ccan help individual fleets maximum uptime and minimize the amount of inventory they need to stock.\u201d\u00a0<\/span><\/p>\n

This article first appeared in the July 2021 print\u00a0issue of Heavy Duty Trucking.<\/em><\/span><\/p>\n

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\"Denise<\/p>\n

By Denise Rondini<\/p>\n

Source: https:\/\/www.truckinginfo.com\/<\/a><\/span><\/p>\n

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Photo:\u00a0Halvor Lines To really manage your parts inventory, you need data.\u00a0 The trucking industry is seeing a parts shortage. Although it started with the truck makers having trouble sourcing computer chips and other parts and components for their assembly lines, it is now rolling into the aftermarket, and fleets are experiencing wait times for replacement…<\/p>\n","protected":false},"author":3,"featured_media":12229,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[397],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/12228"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=12228"}],"version-history":[{"count":1,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/12228\/revisions"}],"predecessor-version":[{"id":12230,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/12228\/revisions\/12230"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media\/12229"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=12228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=12228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=12228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}