Shortages

[Mike Rabe]

Hello Everyone:

I have been having a problem with shortages and am taking steps to remedy the situation. We have a very simple and complete requisition system, and I have found carelessness to be a lot of the problem. I don't believe theft is the problem. I have found work orders where parts are not billed, yet the part(s) were given out and installed. I have two questions.
1) Can you all share some things you have done to control shortages?
2) One parts manager I know told me that he himself does all receiving to the computer system instead of his counter people. Anyone else do this?
Any responses are appreciated. Many heads make better plans than one.
Thanks,
Mike Rabe

[This message has been edited by Mike Rabe (edited 08-18-99).]

[This message has been edited by Mike Rabe (edited 08-19-99).]

[sallen1]

Mike,

We did this (much of the credit goes to the parts people):

1) Everything we use at the dealership is given a part number, entered into the inventory system and is 'protected'. What this means is that the nuts-and-bolts are kept in the parts department, tires are chained to the outdoor rack, etc. Even the chemicals (detail dept), toilett paper, soap, pens ... are part of our inventory.

2) All receiving is done thru the computer.

3) Every employee has a repair order opened under their employee number when they request a supply, shirt or even a bundle of rags. The RO's are closed every month to the proper accounts (shop supplies, office supplies, etc.) and the employees are not charged for the stuff.

Why did we go to this extent? Couple of reasons. First, we had a problem with shortage and were unable to track supplies expense. Secondly, since the inventory system is tracking everything it can be used to monitor ordering. We don't have the problem of vendors over-supplying us. The employee ROs can be compared month to month for usage/waste.

The biggest effect of the employee ROs is that someone has to think before taking something. Do the supplies belong on the RO? Where should we charge out the jacket and hat the sales person wanted for a customer?

Remember, inspect what you expect, and you cannot control what you do not measure.

Good Luck!

scott

[Chuck Hartle]

Hi Mike,

A little over a year ago I wrote several articles that covered the 27 ways you can
mess up your inventory.

I used to have a saying after we completed our annual physical inventory: "Well, we are at 98% accuracy and it only gets worse from here!"

You are on the right track with trying to minimize the people who are doing the receipting. It doesn't necessarily mean you have to be the one doing it, but you want to limit the people who are.

Depending upon the computer system you are using, you have the opportunity to really look at your transactions and who is making the mistakes. For example, "PDA" with ADP systems will tell you the port number, the time, and the transaction that occurred. I can't begin to tell you how many times I found parts "double" posted.

I use to give the parts advisors access to the manual posting program to validate inventory counts if they found the counts to be wrong. This was a major mistake. The parts advisors did a visual count based on what they saw when reality was it could have been in the special order bin, or on will call, or the credit return bill. They never understand all the "variables" that could occur and how to do it.

In short, Mike, allow a chosen few to post, receipt, and adjust your inventory. I found over years of frustration and experience that the less people who made the computer adjustments and the less I tried to "purify" the inventory the more accurate my inventory stayed.

This may not make logical sense to you, especially if you have a big operation. Most parts managers will tell you that they will accept a degree of errors if the productivity and sales warrant it. After all, once you do a physical inventory, it is will correct the errors.

A good friend of mine, understanding the pitfalls of trying to maintain an accurate inventory, did a physical count quarterly.

I have offered you some experiences here with very little in the way of solution, but a lot will be determined on your environment, your computer, and the amount of control and education awareness you give to your employees.

Chuck Hartle'

[This message has been edited by Chuck Hartle (edited 08-18-99).]

[This message has been edited by Chuck Hartle (edited 08-18-99).]

[joe r]

The two things I find most often when
the count is off is in receipting. First
the backorder or cross shipment is not posted
and the order is receipted. Then when the
back order arrives it is receipted again
manually. Second is the person doing the
receipting is interrupted, doesn't stamp the
shipper, and receipts it a second time manually without checking.
Hope this is some help.

Joe Reid



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[J.C. BOHL]

MIKE,
Old parts saying- No ticky no laundry!
In other words, if a mechanic comes to the counter without his ticket or repair order, he gets no parts-period! No exceptions!
Make sure that when you file a claim for a misship, wrong parts received, damaged parts etc.- The parts are not received in the inventory or if it is receipted, be sure to minus it.
Perpetual inventory (one bin per day Min) also cuts down on errors.
One person does all the receipting and adjusting. I use an inventory correction sheet to accomplish this. Plus or Minus, Bin change Or any other part information changes are placed on these sheets by anyone that found some type of dicrepancy. I reveiw all correction before they are implemented.
Spot check your delivery trucks to make sure the parts invoiced are the only ones on the truck.
Check your stockpeople to be sure they are checking part labels and quanity against the packing sheets.
Be sure that your parts room is secure. All doors should have one way key locks(you need a key to open) and no one is in your parts dept. except parts personnell.If you even suspect a key is missing or comprimised, CHANGE the locks!
These are but a few of the things to look for. Hope this helps!