Insights

Parts stock: how to identify non-moving parts and release tied-up capital

How to manage a workshop's parts stock: non-moving parts, ABC analysis, minimum and maximum levels, stock turn and releasing tied-up capital.

Key findings

Identify non-moving parts by the date of the last issue to a job or the last counter sale. A transfer between stock locations is no proof of demand.
Old stock is not necessarily unsaleable. Separate seasonal and safety stock and valid reservations from surplus units. Only the surplus valued at purchase prices shows the capital tied up.
Cash is released only by returning parts to the supplier, transferring them to a branch with demand or making a targeted sale. Neither an accounting write-down nor scrapping releases cash.
Supplement ABC analysis with stock age and surplus value. A good stock turn for the whole parts department can hide expensive parts that sit unused.
Warehouse in Omnetic manages stock levels, reservations and orders across stock locations and branches on a single stock card and helps identify non-moving parts.

Non-moving parts build up even in a parts department that reliably supplies the workshop. They are left over from cancelled repairs, ordering errors or a change in the mix of cars coming into the workshop. They take up space and tie up money that is then lacking for buying items that are used regularly. Stock that remains unused for a long time also costs more to hold than goods that pass through quickly. The parts manager therefore does not just look for the oldest parts, but decides which of them still have an operational purpose and what to do with the rest. That is why parts stock management must identify such items early and decide what to do with them.

When are non-moving parts really a problem?

A non-moving part is an item that has not been issued to a job or sold during the period under review. Unsaleable stock is a narrower group: it has no use in the workshop and no acceptable route to sale or return.

The last 12 months are a suitable base period for the overall report, because they cover a full seasonal cycle. However, a single age threshold for all items does not work. A filter for regularly serviced cars is assessed differently from seasonal accessories or an expensive part that the workshop holds because of a long delivery time.

Situation	What it means	How to deal with it
Filters for cars that hardly ever come into the workshop now	The original demand has disappeared	Limit replenishment, offer the surplus for return or sale
Brake pads reserved for a confirmed repair	The stock has a clear purpose	Keep the reservation linked to the job
A bearing held because of a long delivery time	May be justified safety stock	Record the reason for holding it and the person responsible
A belt ordered for a cancelled repair	A job-specific purchase has remained unused	Release the reservation and give priority to returning it

Compare seasonal ranges with the same season of the previous year. For other items, base decisions on frequency of use, delivery time and the possibility of return. The supplier's return deadline takes precedence over the internal age threshold: a part that can still be returned should not wait until the report flags it red.

How to build a report that shows tied-up capital

The basis is a report by stock card and branch that distinguishes physical stock, reserved quantities and surplus that can be acted on.

The working report should include:

part number, description and location;
number of units and their purchase value;
date of the last issue to a job or sale;
quantity issued during the period under review and receipt history;
reservations linked to an open job;
open orders;
return conditions and the end of the return period;
reason for keeping the stock, proposed action and the person responsible.

When the report is compiled by hand, an export of stock movements has to be combined with reservations, jobs and orders. Errors arise because each list reflects a different point in time: in the meantime, a part is issued, an order changes or a job is cancelled. Warehouse in Omnetic manages stock levels, movements, availability, reservations and orders on a single stock card across stock locations and branches. It reserves parts for open service jobs and releases them when a job is changed or cancelled, so there is no need to match stock with jobs by hand.

Calculate the value of the surplus, not the number of old items

For each item, the following applies:

Capital tied up in surplus = number of surplus units × unit purchase price.

Surplus is stock above a justifiable requirement, i.e. after deducting valid reservations, expected consumption and safety stock. If units from different receipts are valued differently, use the stock valuation of those specific units.

Illustrative example	Oil filters for one engine	Turbocharger
Units in stock	30	1
Reservations for jobs	4	0
Expected consumption until the next delivery	6	0
Safety stock	4	0
Surplus	16 units	1 unit
Purchase price per unit	€6	€900
Capital tied up in surplus	€96	€900

The figures are illustrative. However, they show why the report should be sorted first by expiring return deadlines and then by surplus value: sixteen filters look like a bigger problem, but one expensive part ties up more money.

Watch out for partial consumption. A recent sale of one unit can mask a surplus of the others, so the date of the last issue should always be accompanied by the quantity issued during the period under review.

What to do with the stock: return, transfer, sell or scrap?

Every problem item needs a decision, a person responsible and a deadline. A list without a next step merely describes the state of the stock.

Route	When it makes sense	What to include in the decision
Return to the supplier	The part meets the agreed return conditions	Deadline, condition of the packaging, transport and any deductions
Transfer to another branch	Another branch has a job or recurring consumption	Transport and handling costs, reservation for the receiving branch
Targeted sale	There is a buyer and the part is correctly identified	Selling price, cost of sale and discount approval
Keeping as a reserve	A shortage of the part would affect customer service	Reason for holding, quantity and date of the next review
Scrapping	The part has no safe use and no market	Record of the reason and the appropriate method of disposal

Deal with returns before blanket discounts

For a part ordered for a job that has been cancelled, first use the contractual option to return it. Every additional week in stock can close off this route. A return is not a general entitlement; it is governed by the agreement with the supplier.

Transfers should follow demand

Moving a part to a larger branch does not release capital if there is no demand for it there. A transfer makes sense for a confirmed job or to a location where the item is used repeatedly. For an inexpensive part, transport and handling can cost more than the transfer brings in.

A discount can be better than waiting longer

For surplus, work with the amount the sale will actually bring in after deducting the cost of sale. Further storage will no longer change the original purchase price. Selling below the normal margin can therefore be a sensible way of clearing stock, but as an approved exception, not as a discount that every counter salesperson sets for themselves.

An accounting write-down of stock and the release of cash are different things. Money comes in only from a sale or the settlement of a return. Scrapping removes unusable stock and frees up space, but it does not recover the money spent on buying it.

How to set up ABC analysis and minimum and maximum levels

ABC analysis compares the quantity and value structure of the product range. For managing replenishment, items are ranked by the value of consumption over the same period:

Value of consumption of an item = quantity issued × purchase price.

Items with the largest share of the value of consumption (group A) need the most attention when ordering, while the rest of the range can be managed with a simpler regime. However, ABC analysis does not see stock that does not move: an expensive part with no issues has a consumption value of zero, even though it ties up a large share of capital. This is why ABC analysis should be supplemented with stock age and surplus value.

Do not confuse safety stock with the reorder point

Safety stock is a reserve held in stock to cover fluctuations in consumption or delivery delays. The reorder point indicates when it is time to replenish stock:

Reorder point = average daily consumption × lead time in days + safety stock.

When ordering, reservations and deliveries already on order must be included in the calculation alongside physical stock. Otherwise, the parts department orders the same requirement twice.

In a replenishment model based on the economic order quantity, the maximum stock level is set as follows:

Maximum stock = safety stock + economic order quantity.

Set minimum and maximum levels separately for each stock location according to its consumption and delivery terms. A branch with regular demand should not have the same maximum as a site that needs the part only occasionally. For an item that sells rarely and that the supplier delivers quickly, buying to order is better. The exception is parts without which a repair would come to a standstill or the agreed level of customer service would not be met.

How to measure whether the parts stock is improving

A fall in stock value is not enough. Cutting stock too far shifts the problem to the workshop: technicians wait for parts and repairs take longer.

KPI	What it shows	How to read it
Value of non-moving parts at purchase prices	The amount of money in unused stock	Separate justified reserves from surplus
Value of surplus by type of action	How much stock is awaiting return, sale or scrapping	Track completed actions, not lists created
Stock turn by value	The relationship between consumption and average stock	Calculate by branch and by product group
Jobs delayed because of parts	The impact of parts supply on the workshop	Distinguish missing stock from an ordering or delivery error
Margin on job and counter sales	Price discipline in both sales channels	Separate normal sales from approved clearance sales

Stock turn by value is calculated as follows:

Stock turn = cost of stock issued or sold during the period ÷ average stock at purchase prices.

The numerator and denominator must be valued on the same basis; sales at selling prices divided by stock at purchase prices overstate the stock turn. An average of regular stock levels during the period (for example, monthly) captures seasonal fluctuations better than an average of the opening and closing stock.

For the gross margin, use one definition for all branches:

Margin in % = (selling price − purchase price) ÷ selling price × 100.

Prices must be on the same basis, both excluding VAT. Margin calculated in this way does not include the operating costs of the parts department and is not the same as a mark-up on the purchase price.

Pitfalls to watch out for

Transfers between stock locations make stock look younger. Each transfer moves the date of the last movement, even though nobody has used the part.
Old reservations block usable stock. A reservation for a closed or cancelled job holds a part that may be needed elsewhere.
Volume discounts lead to overstocking. A lower purchase price does not pay off if the surplus sits in stock.
Cutting minimum levels across the board causes stockouts. Cuts should be based on consumption, delivery time and the item's importance to the workshop, not on a single percentage for the whole stock.
Clearance continues with new purchasing. For stock earmarked for run-out, cancel replenishment and open orders, otherwise the surplus will come back.

Omnetic links parts stock with jobs and results

Warehouse manages multiple stock locations and branches on a single stock card. It combines stock levels, movements, reservations and orders, offers ABC analysis with minimum and maximum levels for each stock location and helps identify non-moving parts. It also monitors the minimum margin set for sales on service jobs and over the counter, so clearance sales below margin remain an approved exception.

Reporting calculates from the same data the parts department works with. It provides standard views of stock (age, stock turn, structure), margin and branches, and every figure can be drilled down to the source record. The parts manager can therefore go straight from the total value to the item that needs a decision.

All modules work with one shared record of the vehicle, customer, jobs and money in DMS Core. Workshop reservations, stock levels and invoices are not re-keyed between systems, so the surplus report does not depend on spreadsheets that contradict each other.

Arrange an Omnetic demo focused on parts reservations, surplus stock and stock management across branches.

FAQ

How should a part whose number has been superseded by the manufacturer be handled?

Track the demand history for the old and new numbers together. Otherwise, the old number looks like an item with no consumption, even though demand continues under the new number. Issue the old part only where valid supersession information allows it.

Do customer-supplied parts and consignment stock count towards the workshop's tied-up capital?

No. They should be recorded separately in the physical stock records, but stock that the workshop does not own does not belong in its own tied-up capital. Mixing owned and third-party parts distorts both stock value and stock turn.

Is a unit missing at stocktake unsaleable stock?

No. It is a stocktake discrepancy, and the receipt, issue, transfer or other cause needs to be traced. Classifying it as unsaleable stock would conceal the mismatch between the records and the physical stock.