What Is Inventory Cycle Time?

Way back in the 2000s, there was a viral smash hit that went something like this:

IT’S INVENTORY CYCLE TIME!

INVENTORY CYCLE TIME!

INVENTORY CYCLE TIME!

Wait. That’s not right. Our apologies: apparently, the song in question was about “peanut butter jelly” time. They have the same syllable structure, okay?!

Still, if you’re responsible for a heavy-duty repair shop, you’ll want to understand inventory cycle time, too. Taking steps to shorten inventory cycles can come with serious benefits for your shop—and ignoring this statistic can have surprisingly serious consequences.

Fortunately, you’re not alone in your efforts to learn as much as possible about this crucial concept. In this article, we’ll explain what inventory cycle time is, show you how to calculate it, and give you tips on optimizing this measurement at your shop.

What Is Inventory Cycle Time?

Put simply, inventory cycle time is a measurement that helps businesses track how long it takes to complete inventory cycles. Typically, this statistic is expressed in days.

When a business finds its shop’s inventory cycle time and takes steps to improve it, shop managers can unlock various benefits. For example, optimizing this measurement can help you avoid part obsolescence and theft while keeping you from wasting money on parts you don’t need.

(One more thing: while inventory cycle time is related to inventory cycle counting, these are ultimately two different topics. Inventory cycle time focuses on measuring the timespan of inventory cycles; on the other hand, inventory cycle counting helps businesses confirm their current stock levels.)

Why Is Inventory Cycle Time Important?

Whether your shop specializes in managing massive fleets in-house or taking care of mobile repair jobs, taking control of your inventory cycle time is a must. The shorter your inventory cycle is, the more efficient your business is when it comes to using the parts it has in stock. On the other hand, ignoring your inventory cycle can make it difficult to control your inventory.

Along with that, reduced cycle times can seriously improve your shop’s cash flow by making it easier to turn your inventory back into liquid assets. And when you sit down to make enhancements to your inventory cycle times, these improvements could have a “domino effect” benefitting your business’ entire supply chain.

How Do You Calculate Inventory Cycle Time?

There are two different methods used to calculate inventory cycle time: one for manufacturers and one for retailers. Since your heavy-duty shop isn’t responsible for creating these parts from scratch (at least, we assume), you’ll follow the latter method.

For retailers, cycle time is essentially the amount of time that passes between receiving parts from a supplier and selling those parts to a customer. You’ll be able to find inventory cycle time for individual parts or a batch of components.

Here’s what calculating inventory cycle time looks like for retailers: let’s say your shop gets an order of ten parts from a supplier on June 1, sells one of those parts the following day, and goes through the rest of the parts by the end of the month. In this case, the inventory cycle time for the first part would be one day, while the inventory cycle time for the batch as a whole would be 30 days.

How to Reduce Inventory Cycle Time

While knowing how to calculate inventory cycle time is essential, you’ll also need to understand how you can improve this statistic at your shop. To keep your inventory cycle time to a minimum, you can:

Use Inventory Management Software

The more information you have about your shop’s day-to-day operations, the less trouble you’ll run into while improving its inventory cycle time. Today’s inventory management software can make this much easier: the best programs in this category automatically track part consumption and stock levels. 

Along with that, these programs can partially automate the ordering process by sending reorder reminders when you’re running low on parts. Plus, you can unlock even more perks by integrating your inventory management software with fleet management systems and other programs your business already uses.

Automate Replenishment With Just-in-Time (JIT) Inventory

Adopting the “just-in-time” method is a highly effective way to avoid getting stuck with unnecessary stock. As its name suggests, this approach to inventory management is all about ordering the parts you need in limited quantities.

For example, imagine your fleet maintenance shop knows it has some significant equipment repairs coming up but doesn’t have a clear picture of its schedule beyond that. By only ordering parts for those repairs and waiting until later to buy more parts, you’ll practically eliminate the risk of purchasing parts you won’t use in the near future.

Improve Supplier Relationships and Delivery Times

Since your shop doesn’t manufacture its own parts (again, we assume), you’ll naturally rely on your suppliers whenever you need components. With that in mind, maintaining good relationships with these suppliers is clearly in your best interest.

If you work closely with the companies that deliver your parts, they’ll have a stronger motivation to help you restock parts quickly—which is crucial for shops using the JIT method. And when you have access to the right order tracking tools, you can get up-to-the-minute updates on your incoming deliveries.

Track Real-Time Inventory Levels

Emergency restocks can cause problems for heavy-duty repair shops in more ways than one. While it’s never good to run out of necessary components, it can be all too tempting to buy more parts than you need when you find yourself in this situation. As you might expect, that can lengthen your inventory cycle time over the long run.

Fortunately, your fleet maintenance inventory software can help you avoid this issue by keeping a digital eye on your shop’s stock levels and sending reorder reminders when specific components are running low. Since you’ll get these reminders before you actually run out of parts, you should have little to no risk of needing to make emergency orders with one of these systems.

Use Data Analytics to Forecast Demand

Remember how we mentioned that the data collected by inventory management software can help you determine your shop’s current part needs? Well, this data can do more than that—it can also help you anticipate what/how many components your shop will need in the future.

With the help of high-quality inventory software, you’ll be able to predict the “ideal” cycle time for must-have parts based on existing sales trends and demand forecasts. That means you’ll be less likely than ever to be caught off-guard by your shop’s inventory needs.

Inventory Cycle With a Baseball Bat (and Fullbay)

As you can see, there are many different ways for your shop to improve its inventory cycle time, inventory cycle time, et cetera. Of course, one of the most significant steps you can take toward this goal is implementing the right inventory management software. With one of these programs, you can get powerful data on your shop’s inventory usage and know exactly when you need to order more parts.

That said, some inventory programs are better than others—and Fullbay’s software is better than anything else this industry has to offer. Since our inventory management solution is designed specifically for heavy-duty shops, you’ll get access to powerful features built with your use case in mind.

Fullbay can even go beyond inventory management by helping your shop with service orders, customer communication, reporting, and much more. Get started with Fullbay by scheduling your demo today!