Inventory Control Step 6: Set Min/Max Levels

Set min max inventory levelsSetting up minimum and maximum ordering levels for your parts is going to provide you with the most headway in maintaining inventory control.

By setting these levels, you’re putting parameters on your parts so that you don’t go too far over or under in ordering a certain item. Therefore, it’s extremely important to go through your sales history over the last year and set seasonal levels that prevent you from becoming too overstocked or under-stocked.

Obviously there will be certain times of the year where you’ll want minimal quantities of certain items, because you know they won’t sell. Sheets recommends that you have no more than 30% of your peak inventory stocked during the slow season. Once August hits, you should start working those stocking quantities down. This way you’ll have the ability to buy the right parts at the right time and take advantage of manufacturer discounts.

Once your busy season hits, you’ll want to make sure you have plenty of parts on hand to keep the productivity moving. It might be easy to get carried away with ordering too many for your busy season. But the great thing is, when your quantities start to get low you have time to react and order more. If you have industry-specific dealer management software, it becomes even easier. Your

software keeps track of the levels you put in for each part. When the levels become low, the software will automatically request an order recommendation based off the levels you set.

Just like taking counts of inventory, you also need to analyze your min/max settings on a continual basis. If you don’t analyze your sales history and change your levels on at least a yearly basis, you run the huge risk of overstocking an old part a couple years down the road that isn’t selling like it did previously.

With your min/max settings in place, it’s time to end our journey and plan for the future!

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How to Establish Inventory Goals that Work







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