The Impact of Poor Inventory Management in Fleet Management

The Impact of Poor Inventory Management in Fleet Management

Fleet managers need to juggle a lot of tasks every minute, with each being more important than the next. They need to make sure that the vehicles are dispatched on time and reach the destination on time. Simultaneously, they need to check the schedule, deal with drivers and immediately respond to emergencies. When they’re dealing with high-priority tasks, inventory management gets pushed to the bottom of the to-do list.


Inventory management is not just keeping track of the spare parts, fuel, replacement parts and other supplies. It is also about optimizing the available supplies to improve the profit margin.

Signs of Poor Inventory Management

So, how do you find out if your fleet inventory management system is not working? Here are some tell-tale signs that will help you identify the same:

  • Waste of time because you spend a lot of time searching for the right parts
  • Increase in expenses related to purchasing of spare and replacement parts
  • Loss of warranty because of poor follow-up on claims
  • Unable to track asset movement
  • Your storage space is unorganized
  • Vehicle repairs take longer than usual because of the unavailability of the required parts
  • You don’t do any inventory audit
  • You have replacement parts that you no longer need

Impact of Poor Inventory Management

If you’ve noticed the above signs of poor inventory management, then you would have probably observed how it is affecting the bigger picture. Asset and stock management is one of the critical components of fleet management. And when the inventory is inefficiently managed, you can expect to see the following impacts on your fleet:

Increased Vehicle Downtime

Improper inventory management could lead to longer vehicle downtime. When you don’t know whether or not you have the required spare part, you spend a lot of time searching for it. Plus, if the storage is cluttered and if you don’t have any information about the purchase and use, the task becomes even more delayed.

So, until you find the essential part or buy it, the vehicle remains idle. The longer the vehicle is out of the road, the more losses your business will incur.

Inventory has useless and unwanted spare/replacement parts

Another direct impact of improper inventory management is having a large stock of parts that you no longer need. Maybe, you’ve updated the vehicle or you may have found a better functioning replacement. Having those unnecessary parts in stock can add to your costs.

Sometimes, you may have received spare parts with minor specification changes, which may not be useful for your needs. If they are identified immediately after the purchase, they can be exchanged with the supplier.

However, if you find that you have the wrong-size spare part after a few months, you can’t go back to the supplier and ask for an exchange. So, you would have spent a lot of money on parts that are technically useless.

Unavailability of necessary parts

A related impact of poor inventory management is not having the necessary replacement parts like brakes, filters and others when you need them. At such times, even minor repairs may take a long time as you need to wait for the parts to arrive. It will lead to vehicle downtime and ultimately a drop in the profit margin.

Lose your warranty/claim because of delays

The mechanics won’t know if particular parts are still under warranty. So, they may unknowingly get a new one instead of requesting for a claim. Without effective warranty tracking, you may lose thousands or more depending on the size of your fleet.

Unnecessary expenses

Poor inventory management could lead to a whole lot of unnecessary expenses. As we saw earlier, you may lose money in terms of unwanted parts, unclaimed warranty, and unavailability of the necessary spare parts.

Also, the mechanics will spend a lot of time searching for the right part, which leads to delay in vehicle repair or servicing, and in turn, leads to vehicle downtime. So, no matter how you look at it, inefficient inventory management can lead to a huge loss in the long run.

Loss of customer satisfaction

The biggest impact of poor stock management is poor customer satisfaction. Vehicle downtimes could lead to delays or changes in the schedule. Sometimes, you may need to send a different vehicle to the client, which may not be what they booked. Little things like this could build-up, leading to customer dissatisfaction.

How to Optimize Inventory Management

Now that we have a fair idea of how poor inventory management could lead to business loss, let’s look at the ways in which we can optimize the inventory management system.

Clear and declutter your warehouse/storage space

It’s easier to keep track of your assets when they are stored in the right place. Set up bins, shelves and compartments in your warehouse or workshop for compartmentalized storage of all the spare and replacement parts. It will be even better if you can arrange them in order bought so that the oldest ones are used first before their warranty runs out.

Use bright bold labels that make it easier for the technicians to find out where each part is. All this will help save time and effort in monitoring the assets. Also, the technicians will be able to find out which parts are running out and need to be purchased.

Use barcodes wherever possible

Reduce tracking errors by using barcodes as much as possible. When you purchase new parts, use a barcode reader to “read” all the specifications of the product and update it in your database. This method will make updating your inventory easy and quick. Also, you can quickly check the database to see if you have the requested spare/replacement part. If it is not there, you can immediately place an order for it.

Automate your inventory management system

The best solution for optimizing your inventory management system is by automating it. While decluttering and organizing makes it easy to find things and the barcode system enables you to update your database, automation takes care of the entire process. Once you make a purchase, the details are updated on the database.

This can be done using the barcode or by importing the information from your purchase order. All data such as the type and size of the part, date of purchase, warranty end date, and more can be updated on the database. You can then easily check the inventory based on the item, warranty, purchase date, and other parameters.

The automated system reduces the time and effort required to manually check for product availability. Also, when the spare parts are used, the system automatically updates your to-purchase list. So, you don’t need to worry about not having essential spare parts.

Effective Inventory Management with Fleet Management Software Solution

Our fleet management software solution has a top-notch inventory management system in place. This module works along with the other modules of fleet management to give you a comprehensive fleet inventory management solution. You can also customize the inventory management system based on your fleet size and business requirements.

Interested to know more about our fleet management solution? Contact us right away.