During physical inventory & reconciliation each year (each month if you have a rock star parts manager), we match up parts inventory value vs accounting. Some dealers will incur losses, and some will find they have GROWN parts inventory. If parts inventory has any amount of surplus inventory dollars vs accounting, this is a problem. Concrete doesn’t grow parts well, I assure you, and so will any accountant.

The problem may exist in parts, where they are not accounting for parts costs properly – but the problem could also exist in accounting. Don’t exclude the Accounting department as the probable department of where the problem exists. Only 50% of the parts inventory accounting happens in Parts Department.

This is a long process to look into and investigate, but without hesitation, every touch point should be reviewed if you have more than a +3-5% of physical inventory vs accounting. Treat this no different than if parts lost money in physical inventory. The larger the amount, the larger your concern should be.

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