For a construction company, keeping track of your inventory may seem like a waste of time. After all, getting the job done and setting up the next project usually takes highest priority.
Materials in the yard, tools in the trucks and gang boxes, machinery on the job site, equipment that may be loaned out to someone, vehicles, office equipment and furniture, and so much more—these are all part of what brings value and net worth to your company. Making it a company policy to keep track of those assets in the same way you would financial assets is going to help your company run more efficiently and increase your bottom line.
Whether it’s your accountant wanting to get you the most write-offs or depreciation, you asking the bank for an increased credit limit, the insurance company itemizing for replacement cost, or employees knowing what they have to work with, not knowing your inventory and just guessing can put you at a disadvantage.
Creating a Material Inventory
Back at the office, even when the yard looks organized, it can be difficult to know what is all available. Tracking inventory allows you to easily see what you are using. Overstock or understock materials can be adjusted according to seasonal demand. This timing helps you buy in volume and seek discounts on your most-used materials. Special-order materials left over from a job can be moved out or sold to free up space. Project costs can be estimated more accurately as leftover material that has been previously billed to a past job becomes profit rather than cost. Loss control is more manageable when theft is deterred and inventory is accounted for. The person in charge of the yard should keep track of and document all incoming and outgoing materials. This would include assigning items to either a specific job cost or general stock to attach to a future job cost.
Creating a Tool Inventory
Tools are expensive, portable, and easy to sell, which is why thieves have a strong desire to pursue them. When I buy new tools, I always document the date of purchase, description, make, model, serial number, and price. When keeping a tool inventory, location of tools and equipment should take center stage. You may want to avoid keeping highly expensive tools in certain places. Tools and equipment can be spread out from the shop— in gang boxes at the job site, in company trucks, and in employees’ homes. Your inventory database should identify what tools are where. The employee in charge of the shop has the responsibility to keep track of all tools. As a project is started, the shop foreman should document what tools will go in the job box going to the job, as well as tools and equipment delivered throughout the job. The job site foreman and employees have the responsibility to protect the tools and equipment on site. Once the project is complete, tools and equipment are returned to the shop for verification and check-in. An employee who is issued a company vehicle has the responsibility to protect the tools in that vehicle. A thorough inventory of those tools should be done every month. As you look at each location, you may begin to find tools and equipment that should not be there.
Creating an Office Equipment and Furniture Inventory
Office equipment, computers, furniture, and the owner’s personal property should be itemized and documented as well. A video of the office layout can be used to document higher-end fixtures, furniture, and equipment. Backups of electronics and paper should be stored at a secure offsite location.
In today’s digital age, there are mobile apps that can be used to track material and tool inventories. This has the potential to increase efficiency, saving time and money.
Having the ability to use an app to check shop inventory from a job site can avoid unnecessary office contact and supply house stops.
Knowing what tools are available, as well as what each employee has, helps in scheduling job tasks. Tracking tool and equipment movement between employees and job sites can be achieved without checking them in at the shop, saving valuable time chasing down tools. As each person accepts the transfer of a tool, responsibility is transferred to that person. This helps increase the feeling of responsibility.
As we enter the winter season and some of us come into downtime, a review of your tool inventory and training procedures for employees may be time well-spent. Who knows, you may realize your uncle’s neighbor still has that hammer drill he borrowed two years ago.