Dealers’ Domain

Question: How do you determine when a part should be added as a stocked item in your inventory?

After 30 years of fixing small engines, one has a good idea of what sells, what breaks, and how often. Each time we sell or install a part, we make a little neuron connection in our brain. When we pull a part from inventory, we check to see if it’s the last item in the box. If it is, we enter the part number on the order sheet and select the quantity to meet future expectations.
— Flute Snyder
Hudson Mower Doctor
Hudson, Wis.

For a part to be considered as a “stock item,” it must meet the following criteria:
1. There must have been a request for the part, either from the service shop or from a walk-in customer.
2. The part must fit current machines, of which there are a considerable number in the field, and fit units we consistently service or support.
3. The part is a consumable item, or has a history of failure, or otherwise has a reasonable expectation for repeat sales.
4. The part has an attractive ROI.
— Roger Zerkle, owner
ZDE, LLC
Flat Rock, Ill.

If it for a product we sell or service, we will stock parts once there is a demand. We keep the quantity low unless there is a seasonal high demand. You have to adjust for the seasons. If a new model comes out and sells, we will stock tuneup and basic service parts. After the model has some run time, the problem parts will become obvious and some stock will be added. The real trick is to eliminate inventory before the model goes dead. If you plan to drop a brand, the parts inventory in stock plus what you may need to stock is a tricky issue. One thing to remember is dead inventory is still taxable.
— Matt Borden, owner
Ed & Matt Equipment
Greenville, R.I. 

We stock a part if we sell at least four of them a year.
— Daniel J. D’Arcy
Allpower
Granby, Mass.

Our rule of thumb is after three hits, we stock the part. Of course, there are many exceptions like normal maintenance items — filters, spark plugs, belts, mower blades, etc. Also, we make exceptions on parts for new products that we are going to sell a lot of and we know from previous models what parts we should have on-hand that we won’t worry about being stuck with.
— Greg Hamilton, owner
Hamilton Farm Equipment Center
Okanogan, Wash.

The first way is when a new model or a new product is stocked. For example, a new chain saw.
1. The shop supervisor and I sit down and review the parts breakdown. Using this and our experience, we determine the commonly used parts (e.g. air filter, fuel filter, etc.) that will be needed.
2. Also, we look at the model it is replacing and see what were the commonly replaced parts (e.g. fuel caps, clutch springs, throttle triggers, etc.).
3. Finally, we look at sales of the previous model and try to make an educated guess as to how many of the new model we will sell in one year. Based on all this information, we establish a min/max stock level for each part.
The second way is when we add a new product line/brand or a completely new category. If we carried a similar product previously, we perform the aforementioned process. If it is a totally new category, we fall back to the common (maintenance-type) items, again, air filters, oil filters, etc. Secondly, we add what we believe will be common wear/break items such as throttle cables, blades, triggers/levers, etc.
Lastly, we don’t track lost sales per se, but we do frequently discuss if we see/hear of parts being requested on items we typically sell or service. If we are special ordering an item at least four to five times per year, especially if that part was ordered by one of our techs, we discuss the number of units sold it affects and decide whether we consider it to be a short-, medium- or long-term trend. If we decide it will be a medium- or long-term item, we establish a stocking level of two to three and review it at the end of the year.
— Paul D. Lasiter
Mason’s Saw and Lawnmower Service, Inc.
El Cajon, Calif.

If you start selling a couple of the same part in a short amount of time, you need to have that part on the shelf. For example, a customer comes in with a broken MTD spring and you order it, that’s OK. The next week, a customer walks in and needs the exact same spring and you order it, that’s OK. But the third time in less than 60 days you sell that spring again, you better be putting that spring in stock. Any new belts we see, we will order and put them in stock. Belts are a guaranteed seller; they will fail. Blades are the same way; customers will bend the blade, and if it is new, they want the blade now. Don’t be a parts ordering store and order as needed. Have the part in stock. Use common sense and use your inventory computer to do printouts of parts history and order accordingly. We stock a fairly large inventory of parts. I have had people tell me they drove 40, 60, even 150 miles to come and buy parts. They tell us they have been to Lowe’s, Home Depot, other repair shops, and everybody has to order it or they can’t find what they are looking for and somebody will tell them to, “Try the Lil Red Barn. If they don’t have it, they can order it. If they can’t order the part, nobody else will be able to help.” For example, Saturday, my wife and I were working, and this man shows up with a Tecumseh air filter and pre-cleaner. I saw the part and walked back to pull the air filter and pre-cleaner without a model and type #. He was amazed and said that he went everywhere in his town to buy it and everybody didn’t have it or couldn’t look up the part #. He stopped at a service station, and the guy said the Lil Red Barn in Harrisonburg has the part. He got directions and drove over 60 miles to get to the shop. He was amazed. We hear stories like this all the time. I use the inventory control on my computer system to make sure we don’t run out of the parts.
— Lee Smith
Lil Red Barn Power Equipment Supply
Harrisonburg, Va.

Number one is I never rely on the manufacturers’ suggested stocking lists. When a new model is introduced, I order wearable items like belts and blades. Having these items in stock can be add-on sales at the time of equipment purchase. An experienced dealer can look at a piece of equipment and identify parts that will wear or fail.
As for stocking parts, if I don’t sell two of a part per year, I don’t stock it. It’s more economical to pay the extra shipping compared to the space and capital tied up in stocking obsolete and slow-moving parts.
Last year, one of my distributors dropped the yearly parts return program. For 2010, I gave that distributor a minimal stock order and plan to use aftermarket parts for filling in.
— Rob Leiser
Leiser’s Sales and Rental
Easton Pa.

We are currently using the business software Ideal. The program allows us to run an order recommendation report based on sales and a specific time period. I look at the previous 12 months, and stock on a two-of-four basis, meaning if we have sold four, I will stock two. The system also allows us to look at quantity of orders for that specific part (i.e. If one customer ordered four, I probably will not stock it. I need to see four individual orders for a part before stocking two.). On new products, we’ll stock the basics, as well as wearable items such as belts, blades, cables, switches, filters, etc. For the first two years, I’ll stock new product parts on a one-for-one basis (i.e. If I sell one, I’ll stock one.). After two years with a new product, I’ll convert it to recommend the normal two of four for the previous 12 months sales.
— Jason Hicks, parts & service manager
West Chester Lawn & Garden
Liberty Township, Ohio

What’s being asked for the most is the best way I know how to stock. I also look at sales history and keep what I’m selling the most. It’s still a crapshoot on what to have. Most of the time I end up with more of what we don’t need, and out of what we do need. It just seems impossible to get it right. Our techs give us a hard time when we don’t have what we need to repair a unit in the shop.
— Tony Nation
Nation’s Small Engine, Inc.
Hot Springs, Ark.

Actually, it’s easier to determine what parts to discontinue stocking. Our accounting program has a report which tells me how many of each part we sold in the last 12 months. If it’s two or less, we let stock run out. Adding new parts is a little more “seat of the pants.” I “keep my ear to the ground,” and if I’m special ordering a part three or four times in a month, I’ll start to stock that item.
— Dean Davis
Dogwood Fireplace & Lawn
Carbondale, Ill.