Controlling shop operating expenses with parts management

Streamlining parts inventory management can have a positive effect on your bottom line. It can optimize parts inventories and lower costs, and return vehicles to service faster by boosting technician productivity and reducing downtime.

“Parts inventory management affects everything.”

That’s according to Jeff Tyler, director of program management at HDA Truck Pride, an independent provider of parts and service to the commercial vehicle aftermarket. “Having the wrong parts or too much inventory ties up money that could be used elsewhere, and delays repairs for customers.

“Working directly with suppliers to estimate inventory needs and implementing a parts management system allows you to see upcoming requirements,” Tyler adds. “A distributor that is flexible and responsive to fleet maintenance facilities, independent repair shops and mobile service operations meets your needs successfully.”

There are a number of benefits to parts inventory systems, says Kurt Claussner, president of Fleetsoft, a fleet maintenance and parts inventory management software provider. “One is that inventory carrying costs are lower,” he relates. “A system that reduces that number by enabling more frequent ordering can shrink parts room space needs dramatically. Without a system, fleets tend to overstock yet don’t always know if they have the right parts on hand, and if they run out of parts, downtime increases.”

Claussner also points out that parts inventory management software that can determine usage over time is able to set optimal minimum points and automatically trigger a parts order. The system can also be used to order parts ahead of time for service campaigns, and to review parts cost histories and track price changes from suppliers.

Saving administrative time

Renaldo Adler, industry principal, asset maintenance at Trimble Transportation, points out that one way to control costs through more effective parts inventory management and planning is to reduce the number of purchase orders that need to be generated. 

“There is a hidden cost to processing a PO,” Adler says, “but using software to establish requisition standards based on a forecast driven by usage and needs saves administrative time. The same solution can also lower labor costs and customer downtime because it can forecast repair needs based on trends and ensure the parts needed are on hand.”

Higher warranty claim rates are another benefit of parts inventory management systems, Adler notes. “Without a solution that tracks warranty by knowing when a covered part is used and flagging it when it fails, claims recovery goes down,” he explains.

A system that tracks replacement parts warranty can pay for itself in a short period of time, notes Fleetsoft’s Kurt Claussner. Additionally, another source of savings from these systems is from automatic tracking and recovery of core credits, which he adds can easily slip through the cracks otherwise.

Streamlining parts inventory management can have a positive effect on your bottom line. It can optimize parts inventories and lower costs, and return vehicles to service faster by boosting technician productivity and reducing downtime. 

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Success story: City of Boston

The Central Fleet Management division of the Public Works Department for the city of Boston maintains 1,100 vehicles for about 20 city departments and several outside municipal agencies. It runs three shops where 32 technicians service and repair a wide range of equipment.

When the city of Boston set out to standardize all of its fleet processes to drive ongoing efficiencies and eliminate labor-intensive manual processes, it chose FleetWave software from Chevin Fleet Solutions.

FleetWave is helping Boston realize improvements in its ability to manage fleet inventory. The city fleet handles all of its parts needs on-site using a system that sees technicians bring work orders and vehicle information to a parts room where the data is entered into an integrated point of sale solution. 

The FleetWave integration with NAPA Integrated Business Solutions (IBS) creates a three-way connection between fleet management, technicians and parts personnel. A direct link with the proprietary point of sale system is used to electronically send parts requests from work orders within the fleet’s management software.

The automated process drives inventory replenishment, helping maintain correct stocking levels from multiple vendors. It also streamlines management processes by automatically and accurately recording parts usage, warranty and returns, without the need for redundant data entry. 

“With fully integrated fleet management and parts point-of-sale systems, we are no longer in the parts business,” says Matt Bradley, logistics specialist with the city of Boston, Central Fleet Management division. “We don’t have to tie up employees for managing and re-stocking inventory, and we don’t have carrying costs for obsolete items. The integration also enables significant savings in workload and administration.”

Success story: Superior Bulk Logistics

Superior Bulk Logistics hauls billions of pounds of products between the U.S., Canada and Mexico annually. Using TMT Fleet Maintenance software from Trimble Transportation, it was able to realize an increase in efficiency by tracking parts inventory usage. 

What the carrier also needed was a tracking and recovery process that could take advantage of the data in its fleet maintenance software to file warranty claims.

The management team at Superior Bulk Logistics contacted the Trimble professional services team for more training. The staff worked with Superior Bulk employees to set up and use the warranty management functions in the TMT Fleet Maintenance Software. Together, they built a year’s worth of information into the software. The data included all original equipment, extended and replacement part warranties for more than 1,000 active components.

Today, with this data, Superior Bulk Logistics uses the Vehicle Maintenance Reporting Standards (VMRS) coding system to track and flag internal warranty coverage for parts and parts used on its vehicles by outside service providers. Using VMRS codes is a key step in inventory tracking because not all outside service provider part numbers use the same structure. 

TMT Fleet Maintenance enables Superior Bulk Logistics to track warranties, prepare claims and recover costs on individual vehicles, systems and components and on aftermarket parts. The software also creates warranty master records, daily reports, and failed parts and claims analyses for the fleet.

In the first full month of utilizing warranty management capabilities in TMT software, Superior Bulk Logistics recovered $60,000, the fleet shared. As the amount of warranty recovery is automated and accurate, it continues to recapture revenue on an ongoing basis.