The Hidden Cost of Poor Inventory
How much time does your team spend running to the parts store? If you're like most shops, it's 2-3 hours per day. At $50/hour for a technician, that's $500-750 per week in lost productivity—over $25,000 per year.
And that's just the beginning. Poor inventory management also means:
- Lost sales from parts you thought you had
- Dead stock tying up cash
- Theft you can't track
- Pricing errors that eat your margins
Here are the 5 warning signs your shop needs a better system.
Sign #1: You're Constantly Running to the Parts Store
The symptom: Techs leave the shop multiple times daily for parts.
The real problem: You don't know what you have in stock. You're ordering reactively instead of proactively.
The fix: Track every part that comes in and goes out. Set reorder points for commonly used items. Know your stock levels in real-time.
Quick math: If you reduce parts runs from 3 per day to 1, you save 2 hours daily. That's 10 hours weekly, 520 hours yearly—enough to complete another 50-100 jobs.
Sign #2: Parts Are "Missing" from Shelves
The symptom: The computer (or your memory) says you have 6 oil filters, but you can only find 2.
The real problem: Parts are being used without being logged. Could be techs grabbing parts without creating tickets, warranty returns not tracked, or theft.
The fix: Every part needs accountability. When it goes on a car, it goes on a ticket. When it gets returned, it gets logged back in. No exceptions.
The harsh truth: Untracked parts = untracked profit. If you're "losing" $500 in parts monthly, that's $6,000 per year gone.
Sign #3: You Don't Know Your Actual Markup
The symptom: You think you're making 50% on parts, but your bank account doesn't reflect it.
The real problem: Without tracking actual cost vs. sell price on every part, you're guessing. And you're probably wrong.
The solution: Track these for every part:
- Cost paid (including shipping, core charges)
- Price charged to customer
- Date purchased (costs change!)
Industry benchmarks:
| Part Type | Target Markup |
|---|---|
| Maintenance parts | 50-70% |
| Repair parts | 40-60% |
| Tires | 15-25% |
| Fluids | 75-100% |
If you're not hitting these numbers, your inventory system isn't giving you the data you need.
Sign #4: Dead Stock Is Tying Up Cash
The symptom: Shelves full of parts bought for jobs that never happened, special orders customers abandoned, or bulk purchases that didn't pan out.
The real problem: Cash is trapped in parts that aren't moving. That's money you can't use for payroll, equipment, or growth.
The fix:
- Run an aging report monthly
- Return what you can to vendors
- Discount and sell slow-movers
- Stop bulk buying without data
Rule of thumb: If a part hasn't moved in 90 days, flag it. If it hasn't moved in 180 days, liquidate it.
Sign #5: Inventory Counts Are Always Wrong
The symptom: Every time you count, you find major discrepancies. Physical count never matches the records.
The root causes:
- Parts used without being logged
- Receiving errors (what came in ≠ what was invoiced)
- Returns not processed
- Theft or loss
The fix: Implement a real inventory system and count regularly. Most shops should do a full count quarterly and spot-check high-value items monthly.
What Does "Better" Inventory Management Look Like?
Minimum Requirements
- ✅ Know what you have in stock (real-time)
- ✅ Track every part in and out
- ✅ Calculate actual cost and markup
- ✅ Set reorder points for fast-movers
- ✅ Age your inventory
- ✅ Separate tracking for parts vs. tires vs. fluids
Nice to Have
- AI-powered invoice scanning (no manual entry)
- Vendor price comparison
- Automatic reorder suggestions
- Integration with parts distributors
The Bottom Line
Poor inventory management is an invisible tax on your shop. You're paying it every day in:
- Lost tech time
- Missing parts
- Wrong pricing
- Dead stock
- Unknown theft
The solution isn't complicated—it's consistency. Track everything. Every time. No exceptions.
Take Control of Your Parts Inventory
GearMike includes full inventory management at no cost. Track parts, tires, and fluids separately. Set markup rules that actually stick. Use AI to scan vendor invoices and populate your inventory automatically.
Free to try. Free forever. No credit card needed.