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What your truck stock is costing you
Every part on every truck is cash you have already spent and cannot use. Too little stock is worse — but almost nobody knows which side of the line they are on.
Method reviewed by Darren Lim, US CPALicence CPA.74253602Free · No email required · Nothing leaves your browser
Your numbers
Supply house trips cost you
$82,072/yr
Against $3,570 a year to carry the stock you already have — 23× more. Carrying parts is cheap; going to fetch them is not, and only one of those two ever appears on an invoice.
Stock is cash with a carrying cost
Parts on a truck are money you paid for and cannot spend. Across a fleet it is frequently a five-figure sum, and it costs you every year — in the interest if you borrow, or in what that cash would otherwise have done if you do not.
On top of that sits shrinkage: parts that walk, get damaged, get used and never recorded, or become obsolete when a model changes. That number is genuinely uncomfortable in most operations because nobody counts.
The trip to the supply house is the other side
Understocking has a cost too and it is bigger than owners expect. A trip to the supply house is technician time, drive time, truck cost, and — on a full schedule — a call that did not happen. It also costs the customer experience, which is where the second visit and the bad review come from.
The right stock level is the one where the carrying cost and the fetching cost are roughly balanced. Because the fetching cost is invisible and the carrying cost is a number on an invoice, most contractors understock and think they are being disciplined.
What to do with the result
If carrying cost dominates, the problem is usually breadth rather than depth — too many part numbers, most of which move once a year. Stock what moves weekly, deep; stock the rest at the shop.
If fetching cost dominates, count how many supply house trips happen per truck per week for a month. That number is normally the single most persuasive thing an owner sees, because it converts directly into calls not run.
Either way, count the trucks properly at least twice a year. Stock that has never been counted is not inventory, it is an assumption.
Common questions
- What is a reasonable shrinkage rate?
- Anything you can measure is better than the estimate you are using now. The point of putting a figure in is to see the annual dollar value, which is usually enough to justify counting properly rather than continuing to guess.
- Should truck stock be an asset or an expense?
- It depends on materiality and your accounting policy, and it is worth asking your CPA rather than defaulting. Many smaller contractors expense parts on purchase for simplicity, which is fine for tax and useless for knowing what is on the trucks — which is why the count matters regardless of how it is booked.
- How often should I count?
- Twice a year as a minimum, and a rolling count of the fastest-moving items monthly if stock value is significant. The first full count is usually the one that changes behaviour.
What we do about it
Parts purchasing separated by truck where your systems allow it, so stock value and usage are visible per vehicle rather than as one materials figure covering the whole fleet.