Due to staff shortages, and inventories that bloated as dealers attempted to counter supplier backorders and shipping delays, many locations didn’t have a chance to complete their annual parts inventory. Now that business is starting to normalize; it’s time to get that dreaded count back on your calendar.

There are multiple ways to conduct an inventory using Lightspeed. While many dealers have transitioned to conducting perpetual inventories (counting a small portion of stock each week), that still doesn’t account for all the missing items. A perpetual only accounts for what you can touch.

Lightspeed now provides multiple methods of counting stock.

  • Traditional count sheets and manual posting of those counts
  • Cordless barcode scanners that allow dealers to upload the counts
  • Using a third party to scan bar codes and then uploading the files provided by those services
  • Scanning and uploading barcodes from mobile devices using the Lightspeed EVO app (this is a recently added feature – be sure to try it out even if you don’t use it for a full inventory)

Prior to starting the inventory, best practices dictate that you should print a copy of your inventory valuation report and generate a file showing all of the parts numbers and their on-hand quantities. The second report can help you to restore your original counts (if the process doesn’t go as planned). While it’s not a requirement, it’s also best to ensure that all the following have been processed before starting the count.

  • Post all parts invoices in AP
  • Process all supplier returns
  • Audit the special order and layaway shelves, making sure that the items on the shelf match up with what the system says should be there

When using the built-in functionality of Lightspeed to update inventory, two key changes occur as each parts record is updated.

  • If the count has changed, then the new count will be reflected in the parts record
  • Each time a part is adjusted or the count is confirmed, the “date last updated” for that record is incremented to the current date and time

It’s important to recognize that Lightspeed also updated the posting screen (this was done a few years ago). While the system used to update the “on hand” field for each parts record, the system now updates the available quantity for each item (and then backs into the on-hand quantity). This has made the posting process considerably easier because the system now automatically accounts for special orders and layaways that the customer has not picked up.

Once a dealership has completed and posted the physical counts, it’s then time to work the exception reports. Here are the ones we look at once our counts have been posted.

  • Parts not counted – On hand <> 0, and the date last counted is prior to the start of the inventory. Employees will need to search for these items, and they will need to be written off if they cannot be found
  • Cost value greater than $500 – Double checking to make sure that data input errors didn’t cause a single item to inflate the inventory
  • On hand quantity > 100 – Making sure we didn’t incorrectly key in the quantities for any items

Once the count has been completed, and all the exceptions have been dealt with, it’s now time to run a second inventory valuation report. Dealers will then need to make an adjusting entry to the GL in order to bring the physical count in line with the GL. Again, if you have good systems and good controls in place, then the write-off should be minimal. If you don’t, then there could be a little pain when this journal entry is created.

Over the last 25 years, I have assisted many dealers in conducting their inventories (no, it doesn’t get more enjoyable), and I’ve seen many variations of the process. One nice trick I’ve learned is that when a dealer hasn’t conducted an inventory in more than a few years, it’s often easier to 0 out the available quantity for the entire inventory. Then, when the counts are posted back into the system, a lot less time is spent working the exception reports (which, for some dealers, take more time to do than the physical inventory). Of course, this does make the process of going back and reviewing adjustment reports a little bit more work, but it can still be done.

For dealers who have not completed an inventory in EVO, the process can be somewhat daunting. Luckily, there are lots of great support documents that can be found in Service Connect. However, I also recommend that dealers take the time to conduct a trial run on a small number of parts prior to completing a full inventory. This way, you can learn the nuances of how the updates work, pre-build needed reports, and address any issues prior to the big day.

When all the hard work is done, I like to go back and run a final report to show all the items where the final count was different than what we started with. I look for patterns in the missing items, and then we attempt to adjust the systems and processes so that we don’t have to deal with as many variances during the next count. If you take the total number of parts that were adjusted divided by the number of working days since the last inventory, you can come up with a rough metric for “daily mistakes made”. While it sounds high, I rarely see this number below 8. That many mistakes a day is a lot; there’s always room for improvement.

Lightspeed is the #1 Dealer Management Solution used within the Recreation industry for a good reason. We provide a completely integrated solution for dealers, OEMs and their customers. Our goal is to help you operate your business more efficiently and profitably so you can spend more time doing what you love.

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