When it comes to managing inventory in an auto dealership, one key decision is how to keep track of parts – especially as parts departments become busier and inventory piles up. Traditionally, dealerships have used periodic inventory systems, where audits are performed once or twice a year. However, many dealerships are now shifting toward performing cycle counts to stay ahead of the game. But what’s the difference? And why should you care?
Periodic Inventory vs. Cycle Counts: What’s the Big Deal?
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- Periodic Inventory involves counting the entire part inventory manually at set intervals, like annually or quarterly. While it gets the job done, it can be time-consuming, costly, and it disrupts the dealership’s day-to-day operations.
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- Cycle Counts, on the other hand, break up audits into smaller batches that can be done continuously throughout the year. This allows dealerships to minimize disruption to their parts and service departments and gives managers more frequent checks and balances to ensure inventory is accounted for. Think of cycle counting as your dealership’s check-in for inventory, where you rest easy knowing that the part counts you have on record matches what you have in real life.
Why Cycle Counting Is a Game-Changer for Dealerships
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- Fewer Disruptions
– Instead of shutting down for a full-day audit once a year, dealerships can spread inventory checks across the year in small, manageable batches. This means less disruption, fewer headaches, and a smoother workflow.
- Fewer Disruptions
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- Cost Savings
– Cycle counting helps cut costs in multiple ways. By staying on top of stock levels, you avoid overstocking or understocking, reducing the need for expensive last-minute orders. Plus, you won’t need to rely on external auditors as often, saving both time and money.
- Cost Savings
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- Faster Reconciliation
– With periodic systems, variances often go undetected for months. Cycle counting allows you to catch these issues much faster, allowing you to fix problems before they snowball into larger, costlier ones.
- Faster Reconciliation
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- Better Customer Service
– Cycle counting means fewer parts shortages and faster service for your customers. When you always know what’s on hand, you can serve your customers more efficiently, building trust and loyalty over time.
- Better Customer Service
So, What’s the Downside of Periodic Inventory?
While periodic inventory gets the job done, it comes with some downsides for dealerships:
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- Inaccuracy over time: Inventory data quickly becomes outdated, leading to potential stockouts or overstocking.
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- Disruption: Full-scale audits often require shutting down operations or diverting employees from their daily tasks.
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- Labor-Intensive: Manual audits require time and manpower. Many dealerships end up hiring external auditors, which increases costs.
All this is not to say that annual inventory audits don’t have their place in today’s dealership, but by utilizing cycling counting in conjunction with these periodic inventories you’ll be much more efficient during those audits.
Time to Make the Shift
If your dealership is still using only periodic inventory audits, it might be time to rethink your approach. Cycle counting not only streamlines operations but also gives you the accuracy and flexibility to keep up with today’s fast-paced environment.
By using tools like scan guns and inventory management software that’s built-in to products like our Lightyear DMS, cycle counting helps you stay in control, reduce costs, and keep your customers happy.
Ready to bring your dealership’s inventory management into the future? It starts with our scanning solution. Fill out the form above and we’ll be in touch shortly.