tl;dr Keeping commonly used parts in inventory will ensure you don't lose customers.

There are three basic reasons for keeping an inventory:

  1. Time: If a new customer asks for a repair and you respond, "I'll have it fixed in 5 to 7 business days," that customer will look elsewhere. Keep enough parts in supply at least 2 weeks of common repair.
  2. Uncertainty: If your supplier runs out or increases prices, your business will suffer in the short term as you look for new supply.
  3. Economies of scale: The ideal condition of "one unit at a time at a place where a user needs it, when he needs it" tends to incur lots of costs in terms of logistics. So bulk purchasing, shipping, and storing brings in economies of scale. This results in lower costs to your business.

A few guidelines for building your inventory:

  • Always test parts before adding them to inventory.
  • Keep parts in ESD safe baggies.
  • Use a revolving inventory.
  • Overstock commonly used parts, like display assemblies.
  • Understock parts that lose value, like batteries.
  • As your business grows, upscale your inventory by stocking a wider range of parts.

A warning:

Don't buy too much inventory. Online stores can always get rid of overstock by putting the items on sale. If you have 100 iPhone 4 earpiece speakers too many, it isn't so simple as just putting the repair on sale. You will always be limited by the demands of your local market. Always keep that in mind.

2 Comments

So how many pieces of each part should you stock? What is reasonable?

oskarforsberg1 - Reply

At least 1 week—and probably no more than 1 month.

You have to balance three things: investment, cost fluctuation, and shelf life. These three things are interrelated.

Shelf life: How long is the item going to last? Consider the actual shelf life of the product. (For example, batteries lose their life even when not in use.) And consider the demand of that individual repair. It's hard to put repair on sale.

Cost fluctuation: Parts cost varies wildly over time. iPhone 6 display assemblies are hugely expensive right now—chances are that in 6 months the full repair service will be cheaper than the part costs right now.

Investment: Shelf life and cost fluctuation are both important to watch because they represent losses on your investment. And, chances are, your investment is very limited and will need to be stretched to cover many SKUs, marketing, tools, etc.

That's my $.02. Whatever stock level balances product life, cost, and investment with the actual work you do—that's the stock level you want.

Jeff Snyder -

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