Are You Ready To Invest In Inventory Management Software?
Trades service inventory management has long been the bane of many business owners’ lives. Whether you’re running a plumbing company, an HVAC one, or work with multiple types of tradesmen, one of the hardest parts of growing and having to do more jobs, is the necessity to keep stock.
As a small operator, you used to be able to get away with keeping everything in the back of the office or simply driving to the nearest tool shop and buying parts on the spot. Now that you’ve grown your business though, you need to start organizing your stock in order to keep track, especially as both overstocking and understocking come with huge downsides.
We all know that not having enough parts on hand to meet your needs is a problem. But what many don’t know is that having too many parts is a problem, too. If you have supplies that are nearing the end of their lifecycle, you won’t be able to use them. The result? Wasted money on parts you never used, and wasted time reordering replacements. Additionally, depending on where your business is located, storing those parts can be expensive.
So, we hear you asking: how do I know when I’ve grown enough to be ready for a dedicated trades service inventory management system? Well, you can start by answering the following questions:
Let’s take each question:
This is as basic as it gets. Like we mentioned, many trades service businesses make do with keeping parts either in a truck or at the back of the office. If you’re amongst them and aren’t encountering any issues with misplaced parts or lack of storage, then you might not actually need a field service inventory management system yet.
In order for the investment to make sense, you need to work with a certain level of stock and have a dedicated person to track each part, but more on that later.
On the other hand, if you do have a separate room or building where you’ve centralized parts storage, you’re on the right track. At first, it might be possible to keep records accurate by having an excellent storeroom manager, but as time goes by and your stock quantities increase, you’ll find more and more errors showing up, some of them with dire financial consequences.
Additionally, understanding your inventory flow (what type and how many parts are most likely to be necessary at a certain time of the year) will empower you to negotiate contracts with vendors that will give you access to more advantageous prices and, finally, economies of scale. For all that, you do need a trades service inventory management system.
Of course you’ll want shelving in your storeroom, but there’s a lot more to trades service inventory management than you might think. You’ll find many affordable storage solutions from businesses like Home Depot, but choosing one can be a nightmare if you haven’t done it before. Do you want wall-mounted or freestanding racking? What kinds of bins should you store your parts in? Do you need accessories like corner protectors?
Talking with racking suppliers, other trades service businesses, and fellow business owners in industry forums and on social media can help you get a handle on what you need. You may even score a deal if some other business owner is in the process of upgrading their own inventory and trying to sell off some older racking.
Your technicians need to know where the parts they need are stored and what type of inventory each shelf and bin holds. That’s why clear labelling is key. If you use a digital stock management system you may rely on barcodes, but your techs will need mobile apps to scan and read these so make sure you choose the right one.
Some managers use a label maker to identify which shelves hold which materials, and also leave the original labelling on products so their technicians know what they’re grabbing. Clearly Inventory has a nice article on how to create labels that work, how to stick them so they stay in place, and how to label racks that move.
Letting the wrong employees order parts can cause chaos. Technicians can often call into the office when in need of a part, in which case miscommunication may happen. The service manager has the expertise in the industry, and understands the specifics of the parts and what’s needed, in which case they should be the only individuals to order and organize materials.
Who in your trades service business has the knowledge to order parts and keep your warehouse or storeroom stocked? Depending on the size of your business, that person may have different titles—service manager, office manager, or warehouse manager, for example.
Whoever it is, train your staff to go to that person whenever a part is needed for a job. They’ll be able to get the order done quickly and accurately, and will know the ins and outs of vendor relationships, purchase orders, and parts prices.
There are a lot of benefits that come with implementing a trades service inventory management software but there’s no denying it takes time and money at first. Good news is that you’ll get these back with interest.
We already talked about being a customer service oriented business and how happy customers save you money because ‘acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one,’ reports Harvard Business Review.
An inventory management system contributes a great deal to satisfying customers, as it removes the back-and-forth necessary for technicians when they arrive at a location and realize they don’t have the right part in stock and need to keep the customer waiting another couple of days.
Then there’s the inventory you’re paying for but simply not using. When you digitize your stock, you can integrate it into your trades service management system, which lets you take advantage of the data from all parts of your business to figure out exactly how much stock you need.
For example, you might use sales data and work order histories to figure out what times of the year your customers are most likely to need certain repairs, so you can get just the right stock in ahead of time—rather than guessing at a number and hoping for the best.
An example: When industry component manufacturer Angst+Pfister optimized their stock management with digital processes, their warehouse stock decreased by 28% in just ten months, according to the Inform Software Blog.
Having only the inventory you need, when you need it, frees up your capital to invest in other parts of your business. Here are just a few of the stock-related problems that waste time in your business:
- Searching for missing parts
- Searching for lost inventory sheets
- Deciphering your technicians’ handwriting on said sheets
- Manually checking parts in and out of the storeroom
- Doing inventory with pen and paper
- Not getting inventory orders in on time from your vendors (and not realizing it because you’re not tracking those orders)
- Having to put off appointments because you don’t have the right parts
Digital trades service inventory management either takes these time-wasters off your hands, or automates them so they get done faster.
The Takeaway on investing in trades service inventory management
It’s easy to get so caught up in the details of trades service inventory management that you forget the purpose behind it all: Serving your customer so well that they come back to you again and again. Faster service, better estimates, and more accurate invoices—thanks to your stellar inventory management—are all benefits that make customers happy.
If your answer was yes to all of these or, at least, ‘Yes, I’m prepared to do this before I invest in a system,’ then check out our trades service inventory management infographic below!