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Inventory Controls in Automotive Repair

For shops that carry inventory this can be an area where losses can easily occur. If replacement parts are carried in inventory or tires are bought in bulk then sold off the shelf – this is an area where shrinkage can occur. Shrinkage isn’t necessarily always caused by theft. Sometimes mistakes will occur resulting in parts being lost or misplaced. Thus, measures should be taken to reduce the likelihood of either occurring. Following are the components of effective inventory control:

  1. Physical Controls for Inventory – In order for inventory to be controlled it must be stored in a secure location. That would be an area with limited access that only authorized personnel have access to. If too many people can simply take inventory at any time problems will likely occur.
  2. Inventory Transaction Records – In order to have adequate controls on inventory – all transactions must be recorded. Receipts to stock, issues from stock, returns to vendors and inventory count transactions are examples of transactions that should be recorded in the auto repair shop software in use.
  3. Accountability – Proper inventory control requires accountability. When a person processes an inventory transaction it must be recorded. The date and time as well as the person who performed the transaction must be part of the record. Those responsible for inventory must be accountable for it.
  4. Periodic Counts – In order to audit inventory controls periodic inventory counts should be performed. Further, changes in on hand balances as a result of counting should be reportable Losses should be investigated to determine the cause. Counting can be done on a schedule. For example – if the shop has a stock room with a dozen shelves – each shelf could be counted once a month.

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