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Inventory Management

Even the slightest adjustment to the increments of merchandise can have major effects on your cost of goods sold, and thereby on your inventory turns.  Management of cost of goods and inventory turns can make the difference in whether your store is profitable or not. Since inventory costs are second only to salaries as a percentage of sales, effective management is crucial to running a profitable business.

Understanding the various increments of merchandise by category and how each will impact the overall cost of goods sold will make all the difference in your business.

Here are a few ways to monitor and manage your inventory.

  1. Evaluate inventory turnover on a monthly basis.
    • Monthly inventory turns should range between .75 to 1 turn/month.
    • To calculate inventory turnover: divide the monthly cost of goods sold by the month end inventory.
  1. Increase inventory turn ratio.

    • Turnover goals should be between 8 and 12 times per year depending on the store volume.  By increasing the turn ratio, cash flow is significantly improved.
  1. Take into consideration the current product inventory quantities on hand.

  1. Monitor bulk oil.

    • The cost consequence of ordering an emergency shipment can severely   affect your cost of goods.


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Inventory Management

Back to Basics: Inventory Control and Cost of Goods Sold


A basic rule of business overlooked by the typical lube store manager: Inventory is not product available for sale but a financial investment waiting for a return.

Far too often I talk with store managers who view inventory as an inanimate object. They think of inventory as an oil filter, a quart of oil, an air filter, etc. In reality, the oil filter should be thought of in terms of $1.68, the quart of oil as $2.80 and the air filter as $3.68. Once we begin thinking in these terms, it is much easier to understand the financial consequences of managing inventory. Effectively controlling inventory plays a critical role in the operation of a lube center, impacting earnings and the return on your investment.

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Loyalty is King

Loyal customers are the cornerstone of any successful business but simply providing the best service is not enough these days. Customers are looking for the best price, highest quality and most convenient service. They are highly informed and not afraid to shop around to find the best service from a merchant that rewards and recognizes their loyalty.

The Loyalty Club Program allows you to reward customers for their loyalty as repeat customers and can be incremented by the number of qualifying visits to your store or by the number of qualifying services performed on an invoice. You can specify what the reward should be (coupons/discounts or free services) and what services qualify as counting toward that reward.

Creating and maintaining a reward program is a great way to provide longevity and repeat business to your shop. Loyal customers are invaluable resources that can provide free word-of-mouth marketing, customer referrals, and a sustainable flow of new traffic. By rewarding your faithful customers, you can build a strong brand and reduce marketing costs, all while gaining valuable feedback.
Want to learn more on how to maximize your software by using the Loyalty Club Program? Please contact us:

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Come visit us February 8th-11th at the Orange County Convention Center for this year’s National Automobile Dealers Association (NADA) Convention in Orlando, FL!


Back to Basics: Inventory Control

January 2013 ISI Insider

Inventory management is vital to an effective fast lube operation. The purpose of inventory management is to know what products you have on hand, where they are in use, and how much is being sold. It is the accuracy of this data that drives the success of your inventory process. Even with the most comprehensive inventory management system, if the data isn’t accurate your inventory control is compromised.

Let’s look at two specific ways you can boost accuracy in your inventory management process.

Have a trusted employee make the first count and then have a second count taken. Compare the two counts and verify any discrepancies with a third count of the item. By tightening up the independent count system, you will be better equipped to accurately identify and track inventory.

Inventory is traditionally counted at the end of the month. By integrating daily counts into the inventory process by choosing a selected category to count each day (ex. count all fuel filters on the first Tuesday of the month), you can increase accuracy and provide a higher level of inventory awareness. By scheduling a regular daily inventory count, you can cut down on mistakes and increase employee involvement.

For more information on how to move from a month-end to a cyclical inventory system, please visit: