What constitutes overstock for Auto Spares Wales?

PMF tackles effective stock inventory management – from maximising potential and minimising wastage to monitoring seasonal trends and working with suppliers. We hear from both motor factors and suppliers in this multi-part article. To kick things off, here’s a conversation we had with Auto Spares Wales’ Steve Jones.

Generously, Steve managed to find a window of opportunity to talk to me, with preparations for the opening of a third branch nearing a conclusion at the time of our chat. In return for his insights, I promised to pay him a visit, to see the freshly painted and newly opened store in Merthyr.

Auto Spares Wales is a PDP member and has been in business for nearly four years. Steve, though, has been a fixture of the automotive aftermarket for a lot longer, having played a significant role in Fast Parts Wales’ success.

Steve conceded from the outset, perhaps modestly, that Auto Spares Wales “isn’t as efficient as we could be” but steps are taken to reduce stock wastage throughout the year. For instance, the factor employs a 30-day returns policy where any overstock from the calendar month can be sent back.

But what constitutes ‘overstock’? Steve explained: “If it’s something we sell more than three or four times-a-year and we’re just overstocked by one unit, we’ll keep it. But if an item sells three times or fewer, we’ll send it back in that calendar month.”

I was curious to learn if Steve thought that was standard practice for motor factors. Albeit he is using a small sample – namely businesses in the local area – he believes many don’t, relying on a yearly stock cleanse instead.

He added: “We still do yearly stock plans too, but we also have this monthly return system. It’s something we established years ago when we were at Fast Parts, and we’ve continued it here. Otherwise, we could end up with £50,000 to £60,000 worth of overstock, which takes up space and impacts cash flow.”

One would assume suppliers don’t want to receive overstock returns – it’s probably something they don’t actively promote! – but Steve claimed the suppliers Auto Spares Wales partner with have never complained.

He continued: “Most suppliers are willing to work with us. We rarely encounter issues. When we explain that we want to do 30-day returns, we’ve never had a supplier refuse. They’re usually open to it, though it’s not something they actively promote. The only downside is that we typically cover the return shipping costs. But for the sake of cash flow, it’s worth spending £10 on shipping to free up that money.”

Steve alluded to the strong relationships he enjoys with the majority of suppliers, building trust and rapport over decades, meaning they’re more receptive to sensitive suggestions. That may not necessarily be the case with inexperienced, new businesses in the industry.

Are seasonal trends a reality or myth?

This time of year, one might expect battery, rotating electrics and wiper sales to be on the up, and while I was fortunate to have Steve on the phone, I wanted to ask him about the perceived spikes in demand; for example, Professional Motor Factor product features are largely based on seasonality. During the warmer months, we’ll have an air conditioning feature, but, when the temperature drops, we’ll focus on batteries – but is that the reality of a motor factor?

Steve responded: “Some products are still seasonal, like batteries, starter motors and air conditioning units, but it’s less pronounced than it used to be. We still see spikes in items like antifreeze and batteries during cold weather.”

Different trends in different locations

While seasonal trends still exist, Steve believes they are not as distinct as they used to be – but what about different trends in the products sold by branch? Auto Spares Wales now operates out of three branches – Oakdale, Newport, and its newest, Merthyr Tydfil – the first of which are only 10 miles apart. Given their proximity, one might assume there wouldn’t be many anomalies.

Steve said: “The demand can vary significantly. For instance, in Newport, we stock a lot of Toyota parts, especially for hybrids, since they’re popular with local taxi drivers. But in Oakdale, we don’t see demand for those same parts, so we don’t keep them there.

“In another example, Oakdale has more older Ford Transits, so we stock certain oil grades for them there, while in Newport, there’s more demand for different oil types due to newer vehicle models.”