Plumbing Inventory Management
Plumbing inventory management is one area of the plumbing business that we do not spend a lot of time on. The parts are the necessary evil of doing a repair. We wish we didn’t need them. Some owners pay no attention to their materials and get into trouble because of it, while others spend too much time playing with the nickels and dimes of the small parts, missing the big picture.
Why do we need inventory on the truck? To make the customer repairs easy, seamless, and not waste time going to the parts house. You look more professional if you come prepared. And, the way I see it, you can’t sell what you don’t have. Yet there are many plumbing companies attempting to do repair calls with no inventory. Some of these contractors have the attitude that they will just charge the customer for the time they spend retrieving parts. They generally are also the “cheap” guy in town and because of their business practices, or lack of them, they don’t stay in business long. We need inventory, but how much?
I tell the story that many years ago, we did a physical inventory on every truck. At the time most of the trucks had about two thousand dollars’ worth of materials on them. One truck only had eight hundred while another had over five thousand dollars in inventory! That got my attention. Then I dived into the revenue of both of these technicians. The truck with eight hundred dollars of inventory did 5 times the plumbing repair revenue as the truck with five thousand!
After asking many questions I discovered, the tech with the small number knew what he used on a daily and weekly basis. The tech with the large inventory had the “feeling” that he might need this and that, especially on night call. The tech with the small amount also when to the supply house more frequently and that was costing us money.
After studying this information, we developed a standard truck inventory. A lot of items, but very small quantities. To get started, I got a complete listing of all the repair parts we had purchased in the past year from our supplier. That is one of great things about computer systems; they can just spit out a list within a date range. We took the list, pared it down to the high usage items, added a few specialty items that we used but were hard to get, and developed our first standardized truck inventory.
We ordered one truck stock and the process begin. We completely unloaded the first truck, and re-stocked it with only that material. Then we combed through the materials we took off, and started building the second truck stock and ordering what we did not have. It was a process. I think we had 20 trucks on the road at the time.
Each week, the technician reported what he used the week before and only that material was replenished. This brought our spending down, help stop collecting obsolete materials, and reduced our trips to the parts house. 97% of our repair jobs were completed without leaving the job for materials. The remaining 3% of jobs when we did go for materials, was generally excavations and larger jobs.
Don’t waste your time and money for fancy scanning devices to record and track materials. You will spend more money on the equipment and software than you will save. If your technicians are not listing what they use now, why do you think they will stop and scan it?
Don’t waste your money on a warehouse full of materials. Who will manage that? One truck stock and the overage that is non-returnable from large jobs is all that should be in your shop. Let your supplier be your warehouse. That is what they do, so let them do their job and you do the plumbing work. The exception to this rule is where you are located, especially in a rural area. You may need to stock a little more due to the distance to the supply houses in your area.
And while we are talking inventory, if your techs are paid on commission, pay them on the total ticket including materials. They are responsible for that material and for replenishing it, and they deserve some compensation for it.
If I can help you create an inventory system or other operational systems to enhance your business, contact me at ThePlumbersCoach.com. This is what I do all day, every day!
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