The Case of the Shrinking Inventory
A car dealership faced increasingly higher parts inventory shrinkage—generally an indication of theft or mismanagement. Also, the inventory levels seemed to be higher than in previous years. Here’s what we did.
We attended an inventory count to observe the procedures and conducted a detailed review of the inventory and purchasing system. Next, we determined that excessive parts purchasing was a contributing factor; inventory was becoming obsolete and therefore not eligible to be returned to the manufacturer. Then we recommended that we be present during surprise inventory counts throughout the year.
The client realized significantly lower levels of shrinkage after we attended several random physical inventory counts. And, the amount invested in parts inventory was reduced thereby providing cash flow savings.