The way we handle inventory is determined by the inventory kinds we have. When we think of inventory management, we normally think of direct inventory, which are raw materials for manufacturing, and retail or wholesale, which are direct inventory purchases that are shelved to be sold.
What is spare parts inventory?
Spare parts inventory refers to interchangeable items such as service parts, replacement parts, or repair parts. These items are so important that they generally have a negative impact on overall operations when not readily available or cannot be obtained in the shortest time possible.
Multiple locations and vehicles are common with this type of inventory which results in many problems that manual tracking can’t manage. Trunk stock and spare parts inventory are either very dynamic or very static and it requires a different strategy than traditional retail inventory management.
Classification of Spare Parts Inventory
1. Service Parts
Trunk stock and spare parts inventory in the field service industry is different from inventory in manufacturing. Items from this type of inventory are most likely kept at a hospital or move around a lot in a vehicle, making them more dynamic. The following are some of the issues and difficulties that come with having a trunk stock inventory:
Storing too many items
Field technicians have a habit of always having a large number of spare parts with them. It’s possible that they just used a small portion of the stock, keeping the remainder in the trunk. These things are not bringing in immediate revenue, thus the costs are not being covered right away.
Trunk stock and spare parts are very hard to track. Field technicians often lose track of how much inventory they have when they are focused on providing services to customers. They may recognize what they have but usually don’t know how much they have. Items can be lost easily because of no accountability and very low visibility.
Repackaging kits to make them complete
Medical trunk stock is for those partially used surgical/medical kits that must be returned to a stocking location, sanitized, and repackaged with missing parts to make it a complete set. It’s hard to keep an accurate record of these processes when doing it manually.
2. Maintenance Parts in Manufacturing
The majority of inventory management knowledge does not apply to spare parts in manufacturing. These are not things that should be put on the shelf to be sold, this type of inventory management has its own set of rules. They are static inventory that is kept on shelves to service equipment that’s critical to large industrial plants, which can’t afford to have delays due to equipment failures because it will cost them a lot of money.
The following are the things you need to look into when managing a spare parts inventory.
With a common type of inventory management, we think we don’t need slow-moving items. In spare parts inventory management for huge manufacturing plants, however, slow-moving goods or those that don’t move at all such as insurance spares are the stuff you should wish you weren’t using. This is because you have to use them only when something bad happened or production was interrupted.
Expensive Stockout Costs
The actual price of an item may be irrelevant in large manufacturing plants because the stock-out cost is calculated based on how much impact it can have on the entire operation. That is why inventory administrators should think differently when determining how many things they need to keep on hand to ensure that operations are not disrupted.
Having a Centralized System
Goals or updates in the manufacturing or processing operations should be cascaded effectively to maximize the efficiency of each operation. This has to do with a centralized data management system, that allows everyone to know what you have on hand, and where are they located in order to assist in manufacturing or processing activities.
Spare Parts Inventory Management Systems
ERP systems are commonly best for retail inventory management. The problems and other things you need to look into in spare parts management are best handled by inventory management systems that are specifically made for this type of inventory.
Here’s how inventory management systems can help.
- Field Service. When storing dynamic items, it’s easy to lose track of everything. With barcoding, inventory mapping, and activity history, cases of missing items and theft would decrease. Managers will be able to see which items were checked out, who checked them out, and where they are located. Everything that comes in and out of the warehouse is accounted for and it is easier to locate products.
- Manufacturing. Though spare parts inventory moves very slowly, it still plays an important role in the business. The goal is to see exactly where items are located and what quantities are on hand at all times. When these things are needed, managers must locate them quickly to reduce downtime costs, and because the cost is so high, they should be keen on understanding what and how much they have on hold.
No one buys inventory with the intention of wasting money. How you handle operations and what system you use, determines the outcome for trunk stock and spare parts management.
Some companies find cost-cutting opportunities by examining their inventory to evaluate if the things they have are truly necessary for day-to-day operations. Since trunk stock and spare parts inventory is very dynamic, inventory managers have put in a lot of work to keep track of almost everything.
They check whether parts and supplies are available or not, what needs to be returned to the stocking point for repacking, and inventory movement in general. The inventory management system can make this process much easier by boosting inventory visibility, it assists businesses in assuring accountability, avoiding shrinkage, and decreasing purchase order errors.