Parts Hoarding: One Shop’s Strategy to Survive the Shortage

It’s no big secret that we’re kind of in the Wild West of repairs right now.

Inflation keeps on trucking. We’ve got shortages and supply chain issues all over. This is keenly felt by the parts manager, who all too often has to tell a customer, “Er, I don’t have one of those…and I’m not sure when I will.”

The problem, unfortunately, has not resolved itself. But trucks still need repairs. That means they need parts.

What’s a parts manager to do?

Hoard.

No, friends, we are not joking. While we (and most of the industry) generally support “Just-In-Time” delivery, we’ve all realized that we are definitely operating in interesting times.

Parts hoarding has become part (tee-hee) of the arsenal shops keep on hand to combat the unsteady parts market. They start putting more money (often way more money) into inventory because shops don’t want to be caught without the necessary parts, especially considering how long it’s taking to get some of them. “JUST BUY IT” becomes their mantra.

A more accurate phrase might be parts stocker or even enthusiastic parts purchaser, but…well, we like the dramatic sound of parts hoarding.

Anyway, we spoke to Zeb Todd, parts manager and admitted parts hoarder of The Service Company, to learn more about this strategy.

WHAT IS A PARTS HOARDER?

First, let’s break down what we mean by parts hoarder, which is an amusing term but possibly not entirely accurate. It calls to mind a dragon sitting atop a pile of parts, guarding them like they’re precious treasures. But that’s not entirely accurate, right?

“That’s close,” Zeb says.

(That was all the go-ahead we needed to ask our talented graphic designer, Sam, to draw Smaug for the header.)

He quickly provided some additional context.

In Zeb’s case, he’s just acquiring as many parts as he can so he can continue servicing his customers.

He begins his parts shopping in a familiar way. When it comes to fast-moving parts, he heads to The Service Company’s preferred vendors to see if they can provide them. If they can’t, he checks with other vendors. His tactics shift when he finds out someone has more than one of a part for sale. When that happens, he says, “I buy all they have…within reason.”

The method he describes is more or less a survival tactic. If your shop doesn’t have the necessary parts to complete a repair, and you tell the customer that…you’re essentially letting go of that customer. It’s one thing to be able to say, “But I know where we can get this part,” or to direct them elsewhere—in that case, you’ve still performed a service. But if you don’t have the part and have no real way to get it, then yeah, that’s a customer and revenue that is lost to a competitor.

“A HODGEPODGE” IN THE PARTS ROOM

The parts shortage has impacted everyone. Shops that primarily service fleets may have a slightly easier time of loading up, as they’ll be looking for the same kind of parts time and again. The Service Company, which has a variety of customers scattered through different industries (heavy, ag, light, and more!) has a somewhat tougher time of it.

“If you are strategic about your inventory load, you have to do this,” Zeb advises. “We carry a lot of categories, a lot of lines; we have a fairly diverse and thorough inventory because we have a diverse customer base.”

The Service Company, being a large shop with varied customers, has always carried a large inventory. But stocking up on necessary parts when they can has led to some…interesting…results in the parts room.

Namely the room itself is now filled with boxes.

But there’s issues on the digital end, too.

“At one point, I carried one brand of U-joints, one brand of clutches, and one brand of brakes. Now…when you walk [into the parts room] you see a hodgepodge of pretty much everything.”

While it’s great for keeping the customers happy and the shop operating, the various brands and purchasing sprees lead to some unique tracking difficulties. Correctly onboarding a part for resale involves some work; usually, Zeb plugs in the vendors, along with the mins and maxes, categories, and so on. In the past, taking on a new product line meant plugging in all the necessary info and then just keeping things up to date.

Things are a little different now.

“From week to week, I don’t know what brake shoes I’m gonna have, for example,” Zeb tells us. And every week he’s reinventing the wheel and adding new numbers into Fullbay.

That’s frustrating for everyone, from techs to service managers to counter staff.

RISING PRICES

The scarcity of parts, along with the supply chain problems and inflation, have naturally led to that most dreaded of situations: price hikes.

Zeb admits he doesn’t even look at prices anymore. “Last week I bought some hydraulic fittings and I paid considerably more than what I’d normally sell them for. I paid to get them on the shelf. I don’t care what it costs, within reason—I have to keep my customer satisfied and keep the shop doing well.”

Of course, that leads to higher markups. “I end up charging my customers more than I want to,” he says. “But we’re still finding a solution.”

Customers don’t like the higher rates, but really, what can they do? They’re pretty much all aware of the challenges the industry is facing. The shop down the street or across the city is going to have the same problems (and similar parts pricing) as The Service Company.

IT’S MORE IMPORTANT THAN EVER TO WORK WITH YOUR CUSTOMERS

Zeb and The Service Company have adapted to the parts shortage—but that doesn’t mean he’s not concerned about where things are going.

“Where is this all going?” he wonders.

We lingered on that topic for a moment. The parts shortage is problem enough—but we’ve all been watching the prices for gas and oil skyrocket, seemingly over the span of weeks. “I would encourage people and shops to work with your customers and look at your maintenance schedule. Can we extend oil changes to a longer interval? If that’s what the manufacturer’s specs indicate, then that’s what we should be doing.”

Extending services that way saves the customer money and hopefully extends the amount of oil a shop has in reserve.

Zeb had a couple extra pieces of advice for shop owners or managers who are thinking about stocking up.

The #1 thing that he’s found helpful is weekly meetings with his purchaser on back orders. “My standard for what I call an acceptable amount of back orders over a certain date range—we’re 6-8 times above what I want on acceptable back orders. You need to set aside some dedicated time to go over back orders and see where the shop is at. Aged back orders mean inaccurate inventory. You do not want inaccurate inventory at any time, but especially not these days.

He also recommends using Fullbay’s velocity report. “You can get a lot of valuable information out of that inventory velocity report. It’s fantastic…I’d encourage people to put it to work for them.”

“AN UNPRECEDENTED TIME”

We did wonder if Zeb was worried about some kind of dip—let’s say the market abruptly stabilizes and he’s got a bunch of parts on his hands that he can’t unload except at a cost.

Not at all.

“If you’ve got the product right now,” Zeb tells us, “you’ve got the sales…it’s an unprecedented time to sell parts.”

Granted, it’s not that simple (oh, if only!). It takes a lot of work, a lot of inventory, a lot of room, and oh yeah—a lot of frustration and ticked-off people stumbling over boxes that should be on shelves. But there are so many trucks on the road today, and they’ll all need work (and parts!) at some point. That need isn’t going to go away. So shops have got to learn to work with it.

Zeb also sells parts to nearby shops when they have extra stock. “As long as we have integrity, and they have integrity, there’s no reason not to work together,” he says. “I work with them on price. I want to be a solution to people who own the truck, and for other shops in the area. I want us to be a good representative for the industry.”

For The Service Company, that means working hard and striving to be the best in the field, during the good times and the unprecedented ones.