What Caused Your Pad to GL Variance?

[FixedManager]

As we have a variety of professionals on this forum I feel a thought starter was in order. My very first physical inventory was over to the tune of $46,000 and after a few sweat soaked days I was able to get DMS reporting, finding the owners newest toy was entered into the parts inventory. This lesson taught me much and I have remained vigilant throughout my career.

It shouldn't be a finger pointing session between the Comptroller and the Parts Manager. There are so many ways an inventory can go out of balance and it is rarely one thing. Please share the oddities you've uncovered causing inventory general ledger variances so together we can learn and laugh with each other.

[TheEd]

Outside of my first inventory after taking over, we've been pretty nominal ($2k to $3k swings negative and positive since the office doesn't book appreciation and refuses to reconcile at the end of each month).

However my predecessor was very much addicted to the white box vendors, we had about a dozen of each cabin air filter, all non-GM, shop supplies were stocked up to the point that I'm still going through his Roloc discs five years later. He would buy takeoff wheels from the ADI and steal them. To make up for the missing inventory he would buy from the white box vendor a bagged quantity of keys or Roloc discs and instead of $40 for a bag of 50 Roloc discs, he would enter a quantity of 50 Roloc discs at a cost of $40 each.

You would think after a former manager manipulating inventory like that to steal they would definitely want to reconcile monthly, but sadly no.

[Jaybee]

Thanks for reminding me. I had a previous PM leave me an 8 year supply of a Honda drain plug washer. I'm sure there are still some on the shelf.

John

[Denise Trimble]

It is always nice to find out the owner has put a set of wheels or other nonsense in your inventory. The Office Mgr/Comptroller may forget to mention it until inventory reconciliation time.

[Parts007]

One position I held, I found a box of Napa Roll Pins on the parts shelf with a had written GM part number on it. The box of Napa roll pins cost $38. I typed the GM number into my DMS to find out that we had $647 worth of roll pins on the inventory. Turns out the previous manager was paid off of 687. He made lots of 687 off of that invoice!

[brparts]

this did not happen at my store , but a friends store. before my friend went to work there they fired the prior parts manager because the inventory was short 2 years in a row by thousands of dollars. when my friend took over he found out that the service manager had access to the parts side on RO's. after the cashier closed the RO he would go in and open it backup and change the parts prices and put the difference to labor. he was changing the list price and the cost to keep the gross percentage in line. Nobody in service should have access to parts on RO's .

[Zep33]

Nothing major but years ago I found a plow that a customer didn't want on his plow equipped new truck so they just stuck the value of it in my inventory and never told me.

Double postings by 2 people in the office - One was posting off the Saab packing lists that had pricing and the other would post the factory invoices. They had different numbers so there was no warning when the stuff got posted the 2nd time. Threw my inventory off by $75k

Another thing I've seen with these corporate, group dealerships: They go through AR/AP people like I change my underwear and one day I was looking through RICT in CDK and found Certified Used car incentive invoices posted to parts inventory, shop tools posted to parts inventory and our sister store had the service department massage chairs and the store's landscaping bills posted to their parts inventory.

If you have access to RICT, it can be quite enlightening

[TheEd]

Service having access to parts reminded me of an incident I forgot about. Early on I kept having a loss on reconciling oil each month, at first I chocked it up to the overnight UCI tech service had, but when it continued after they got rid of an overnight tech, I knew something had to be going on and again I assumed it was after hours, so each night I would turn off the pump switch in parts, it still happened. Figured it had to be coming from another source then, checked my parts transactions on each oil part number and found it.

Service manager was changing the billed oil quantities on every warranty and maintenance plan RO to "make it work" with what GM or the plan paid for the RO, of course labor stayed at full bill. It came down to him losing all parts access and I had to password lock the Discount Coupon - Parts function in ROs.

[olepartsguy]

I was a Saturn parts Manager in 06 my first manager gig. My first inventory ever I was over 81,000. my GM and controller freaked out they never had a overage. Its a Saturn dealer this is not how we do business I was being told. now remember I just took over about 6 months prior to that . They tell me you better find the problem. Ran a few reports and about 3 hours later I found that GM did not bill us $72,000 for fuel pumps I ordered. as for the rest of the 9,000 they thought it was weird. I told them that is normal for a busy GM dealer to have overage . So of course they had to check the other GM dealers that they own and ask those controllers what they experienced so then i was in the clear. DUMBASSES I am making them money. AS for the $72000 GM after there own audit billed us 6 months later. We held it in a 220 acct waiting for them to catch up to us

[retiredpm]

As we have a variety of professionals on this forum I feel a thought starter was in order. My very first physical inventory was over to the tune of $46,000 and after a few sweat soaked days I was able to get DMS reporting, finding the owners newest toy was entered into the parts inventory. This lesson taught me much and I have remained vigilant throughout my career.

It shouldn't be a finger pointing session between the Comptroller and the Parts Manager. There are so many ways an inventory can go out of balance and it is rarely one thing. Please share the oddities you've uncovered causing inventory general ledger variances so together we can learn and laugh with each other.

I've been retired for more than 10 years now but I remember a Chrysler seminar once probably 25 years ago that mentioned that very thing. The example used was the owners boat being in the parts inventory.