Within this article, we will talk about resource management, especially the different types of management costs.
The optimal management of resources is a really important and fundamental aspect for every entrepreneur. This argument applies to all types of companies, and obviously also to workshops.
Having too many stocks means having high costs within the workshop.
In fact, inventory management costs represent a percentage of the value of the inventory. This percentage can clearly vary from individual sector, but normally in the Automotive sector it is around 25%.
It is therefore very important to know the costs, in order to understand how much profit we can make from the inventories. Costs, obviously, are not all the same and we must therefore distinguish one from the other.
This discourse is used to better understand how to divide costs, and optimize the internal management of a workshop.
Costs can be divided into three categories, namely:
- the costs associated with the order
- maintenance costs
- and deficit costs
Order costs are those costs that are incurred each time an order is placed. They are related to logistics, such as transport costs or bureaucratic expenses.
Carefully evaluating a supplier takes time... and therefore also costs. Selecting suppliers, and subsequently contracting with it, again involves a cost.
If our habit is to deal with only one representative, in relation to all the materials we use in the workshop, the cost will most likely be low.
On the other hand, however, if we have several representatives who work many hours a month, the order costs are high. We may decide to minimize the costs of ordering, provided clearly that we do not purchase products at an excessive price.
In fact, if the only representative sells us the materials at a very high price, the difference we pay more could be recovered by negotiating with other representatives.
The online market allows you to identify new suppliers, simply by browsing online. This activity can also be carried out outside working hours, and the entrepreneur can do it himself. In this way, there will be an optimal working process inside a workshop and not too much time will be lost.
Of course it also depends on the size of the workshop, and on the complexity of the repairs the customers require.
Maintenance costs, on the other hand, are in turn divided into four types.
- capital costs
- storage costs
- the service costs
- risk costs
All these costs are related to keeping the goods inside the workshop.
Capital costs are those costs that are associated with investments and interest on capital invested in inventories.
Storage costs, on the other hand, are all those costs that affect the maintenance of the building and systems, such as heating or lighting or even the lease and property taxes.
Service costs are those costs related to the movement of goods, but also to insurance costs or to the software/hardware material necessary for the management of the workshop.
Finally, risk costs are those costs that can affect inventory, as they are disposable value. For example, all those expenses related to unsold or obsolete goods.
We can say that this second category of maintenance costs are linked to decisions already made, or already taken by the entrepreneur. If we have purchased a workshop, we will therefore have absorbed the maintenance costs already active.
These costs are clearly difficult to keep low, as they still depend on day-to-day management. We can decide to reduce certain costs, such as warehouse lighting, or any software that is amortized over time…but will still remain present in the workshop.
Deficit costs, on the other hand, are all those costs relating to any order cancellations or breakages. In the event that a customer orders a piece, but then doesn't completely "purchase" the repair, we have a material at home that we don't know what to do with.
On the other hand, if a material has been in storage for a long time and fails, such as an old wiper blade, then that is also a deficit cost.
In consideration of all these costs, it is clear that the warehouse management of a workshop is really something very complex.
Early costs can clearly be reduced, provided that the right balance is struck between optimal workshop management and low ordering costs.
The maintenance costs, on the other hand, are those costs related to the stock already in place in our workshop. In this regard, we would like to remind you that a correct positioning of all products allows the entire management process to be reduced as much as possible over time.
If we have already positioned the products in the best possible way, as soon as they arrive for delivery, there will be no more handling problems or rearranging everything.
As a last category, we have deficit costs… which are linked to contingencies and don't tend to depend on us. The latter are quite unpredictable and we don't have to worry too much…but we still have to consider them.
At the end of this article, and after having expressed the different types of costs, however, we want to underline an important card. Optimal warehouse management also implies a forecasting scope for the coming months and for market trends.
Our advice is to keep inventory lean, and not stockpile too much material. It is good to be ready to carry out repairs, for any type of car, but we must also preserve our economic capital.
In this way, we will avoid deficit costs, linked to product breakages, or to risk costs, precisely for unsold or obsolete goods.
In the event that we lived in a large city, we could clearly benefit from an efficient service from the couriers in the immediate delivery of the products. In the event that we live in a remote village in the mountains of central Italy, it is probably advisable to have some extra stock of material.
In fact, every workshop has its own nature… different from one another. For this reason, we obviously recommend a careful and precise analysis of one's reality, according to what we have expressed in this article.
The goal, in fact, is to reduce all individual costs as much as possible, in order to have a large and solid economic margin.
Subscribe to YouDriver to stay updated on all the articles on optimized management of your workshop and to find new customers in your area.
credit photo freepik media press