“I might need that!” is a common refrain I hear from HVAC and Plumbing professionals as we review their overstocked vehicles and storage locations. Unfortunately, there’s a mistaken belief that having every single item that they may need is good business. But the truth is that by having too much inventory, it is costing them money.
The ProblemLet’s look at these 4 reasons why too much of the wrong inventory is bad and what to do about it.
1. Clutter
Having too many items in inventory wastes valuable time. Jammed packed Sea Cans, storage lockers and vehicles makes it difficult to find anything. Constantly having to move, step over or around inventory just to find what you need is inefficient. Worst of all, after fruitless searching, you just end buying another one.
2. Money
Having excess inventory is one thing, but having the wrong inventory is just bad business. Many owners would be shocked to realize how much “dead” inventory they have lying around. It can easily add up to thousand of dollars. And with rising interest rates, your monthly interest charges on your line of credit is about to get expensive. Having too much inventory is like burning a handful of twenty dollar bills every day.
3. Space
It stands to reason that the more inventory you have the more storage space you need. Any real estate whether a Sea Can, storage locker or warehouse costs money. So, unless business is growing by leaps and bounds, you should keep storage space to a minimum.
4. VehiclesWith record high fuel prices, running down the road in inventory laden vehicles can reduce fuel mileage by 1-2% for every 45kgs (100lbs) of extra weight according to the EPA. You might be surprised to find your service vans are carrying an extra 150kgs (300 lbs) of “just in case inventory”.
So, here are 5 ways to better manage your inventory and put dollars in your pocket:
1. 80/20
Take the guess work out of managing your inventory. Chances are you are using 20 percent of the items 80 percent of the time and which tend to be the items you run out of during the day. But first you need to identify these core items.
To determine these core items, place a clipboard in the back of the van and record what you use over a four-week period. Once you have your core list, stock up on those to ensure you always have ample supply and don’t risk running out.
2. Label Your Storage Containers and Shelves
Craft an inventory system that works for you to help you track and organize your current inventory. By labelling your storage containers and shelves, you won’t waste time looking for items, nor money in replacing items you already have. With Wolseley Express Barcode Solutions, you can create custom lists and generate and print barcode labels and stick them directly to your bins. Then, when you can see items are getting low, simply scan the barcode with your mobile device and order online to be delivered or picked up at your local branch.
3. Software
There are a number of software solutions on the market designed specifically for contractors. Most of these softwares are an all-in-one solution that do billing, inventory, scheduling along with a separate inventory module.
The advantage to these is that they can give you an accurate status of each inventory item. The downside is that most of these softwares are expensive, require a steep learning curve, meaning you must be able to dedicate significant time to update your inventory status. Although a good solution for larger shops, it’s not an ideal for smaller shops that don’t have the administrative office support.
4. Old school solution
Sometimes old school solutions work best. As a first step, organize your vehicle and storage facility so that the core inventory items have a permanent home.. Then, again using a clipboard and pencil, simply record each fitting you use and once you have used, say 12, you order another dozen.
Alternatively, you can take a page from Toyota’s playbook. Simply use a laminated piece of red cardboard with product description and stock number written on it. Ideally, you place it in the bottom of the box or bin and when it becomes visible, it’s time to reorder. Not sophisticated, but functional.
5. Large jobs
Prepare a list of all the items you need at least a week in advance and schedule it to arrive 2-3 days ahead of time. With Wolseley Express lists, you can build out your list by searching items or uploading a spreadsheet. Afterward, you can save your list and re-use in the future, making re-purchases fast and easy to repurchase and restock.
Managing inventory and focusing on core items can boost your bottom line. With Services like Wolseley Express, you can easily order core & non-core items wherever you are, from any device, and know that the product will arrive within the next 24-48 hours.
Greg Weatherdon is a business advisor to HVAC & Plumbing contractors, author of Get More LIFE Out of Your Business and producer of The Small Business Minute Podcast available on all major platforms including iTunes, Google Podcasts and Spotify. Visit www.gregweatherdon.com for more information.
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