Why Parts Reconciliation Is Critical for Automotive Service Shops
In the fast-paced automotive service and tire retail industry, operational efficiency isn’t just desirable—it’s absolutely vital to continue serving your customers and retaining quality employees, not to mention making a profit. Staying lean while still producing a high-quality service is key. Streamlining processes and disseminating key intelligence keep operations lean and smart. Among the many moving parts of this dynamic industry, one that often gets overlooked is parts reconciliation: the process of ensuring that parts ordered, billed, received, used, and returned all match up. Parts reconciliation can make or break profitability.
The Challenges of Parts Reconciliation
Traditional parts reconciliation is labor-intensive and error-prone, requiring managing paper invoices and statements, running multiple reports, manually cross-referencing these sources, and managing this whole process with spreadsheets. Even if you leverage scanning technology to digitize this process, you’re driving the reconciliation process using paper documents often received secondhand from each store’s front desk, perpetuating the labor-intensive and error-prone aspects of this process. Needless to say, these are not sustainable methods, especially in today’s tight economic climate.
What is DataLynx Cloud?
Hundreds of automotive service and tire businesses in North America utilize a product called DataLynx Cloud to streamline their operations. DataLynx Cloud integrates your existing business systems to elevate the company’s intelligence quotient and automate key business processes. In 2023, these users came to us with these challenges in their parts reconciliation process, and we delivered.
Introducing Automated Parts Reconciliation by DataLynx Cloud
The first challenge was to create a system of record with which to use to cleanly drive the whole parts reconciliation process. So, DataLynx Cloud partnered with some of the biggest parts suppliers in North America to retrieve all your invoices and credits digitally from participating vendors daily, and we’re adding more vendors every month.
Utilizing custom-developed Machine Learning models and A.I., up to 85% of invoices and credits are automatically reconciled, tracing against repair order part lines and AP to validate parts ordered and credits for returns. Unreconciled invoice and credit lines are routed to an automated Exceptions process with built-in, advanced reconciliation tools, simplified review displays, and approval workflows to assuring all parts are accounted for and charged correctly. Leverage dashboards to track the progress of your AP department’s reconciliation status.
Parts are Reconciled. Now What?
After Automated Parts Reconciliation is complete, daily, weekly, or monthly, it’s time to put all that intelligence produced to work to streamline your business even more. Discrepancies need to be addressed. Discrepancies may be in the form of the following. Leverage dashboards and alerts to allow your leadership team to easily identify and address discrepancy scenarios:
- Cost Mismatches – When vendor price doesn’t match repair order cost, determine which source is incorrect and why the discrepancy exists. And make sure it doesn’t happen again.
- Potential Theft – When a part is ordered, it has limited destinations. If it’s not on a repair order or returned for credit, it must be at the shop. Otherwise, you have a bigger problem that needs to be addressed and perpetually deterred.
- Unreturned Parts – If a part is not utilized on a repair order, it should be returned for credit. Be sure unreturned parts are quickly identified and shipped back to the vendor.
- Profit Inflation Detection – Some employees may be compensated based on Gross Profit. Gross Profit calculations are typically sourced by repair order data which may be manipulated. Leverage reconciled data to calculate true Gross Profit, and quickly address and deter improprieties in repair order cost entry.
- Profit Goals – Set profit goals on part sales and quickly identify stores, service writers, and part sales that have a pattern of selling below established profit goals.
Next Steps
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