Inventory Stock,,How Much Is Enough.

Steve_35

out of the supply houses is a money maker. Can you make arrangements with your local supply house to make a truck sorted, first thing in the morning delivery? If so, you could fax or e-mail an order to them every night based on what the techs used out of their trucks that day. If they make the delivery before the techs head out they could re-stock their trucks then.

Failing that they should be able to make the delivery later in the day and the techs could stock that night the products they used the day before. The key is to get the orders packed for each truck rather than lumped together.

freyheating265342

Inventory

We carry aprox. $ 25,000 in inventory in our stock room. (fittings,pipe,faucets,traps,heating controls,circulators,etc). Our 4 techs.also have thier trucks stocked with aprox. $15,000 inventory,tools and equiptment.We continue to visit the supply house, on average 2.5 days a week. Our main supply house is only one half mile from our shop,two other supply houses are with in five miles....My loveing Wife and excellent office manager is questioning the need for such an inventory for the shop. She sees the $25,000 shop inventory as possable real estate investment or the shop space as rentable income or something else usefull....How much inventory is enough when the supply houses are right arround the corner....I belive that our inventory is a necessary evil and feel very strongly about keeping what we have and adding to it...I need your thaughts before my shop is converted into a craft store or something..Thanks.

Ken_8

That depends...

on many factors, e.g.,

1) Do some of the parts "turn" every month or once a year?

2) Are a few of the parts laying there for over one year?

3) Are some of the parts bought in bulk, saving money over single lot purcahses?

4) Are some of the parts too bulky to be stored in the trucks?

5) Do you know how much money is really tied up in there and how many times the investment is "turned" a year?

6) Are some of the parts difficult to get on a single visit to the supply houses nearby?

7) Could you use the space they take up to significantly enhance your operation and make more money?

8) How much money would you lose if comparing space lost vs. having useful inventory on hand?

9) What is the profit margin on those goods in stock?

10) What was the basis to keep that inventory in the first place and what changed to now make you re-think the logic of the original decision?

How's that for starters?

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freyheating265342

Inventory

Thanks Ken, Ill try to answer in order,..Most parts do "turn" monthy. (Ball valves,1/2" & 3/4" fittings,chrome traps,basket strainers...Basic plumbing maintenance parts...Heating parts, motors,honeywell controls, circulators, extrols,"turn" seasional but still move through stock...I do not stock water heaters on the trucks but have five in shop.We do stock some specialty parts...Our profit margin is 25% on parts and labor..I do not have an inventory control program and not planing to get one...Some stuff just sits and collects dust..We will be moveing into a new shop/office soon and need more office space. The licensed plumber part of me says more shop and more parts..My beautiful wife and business brain says that the office is the "HEART" of our Plumbing & Heating Service company. I think that my transition from plumber mechanic to office and business director has made me rethink certin aspects of my P&H business...Thanks again.any and all comments welcome.

jeff_51

re: stock

we use spartons and have found that a well stocked truck should be able to go a week without restocking. This of course does not take into account the specialty stuff that it just doesn't pay to stock. We charge the cust to run and get that stuff. Your supplier should be able to keep a running list for your techs keeping each truck seperate and have that sent to the shop on Fri. Our techs come in on monday only for an hour to turn in paper work (which should be complete at the end of each job) go over any thing we need to go over on our meeting, clean out their truck and restock. We either fax out or nextell out each job to the tech. Keep them out of the shop and the supply house. The only stock we keep is the leftovers or a few specialty items. If you haven't moved that product in thirty days, its a money loser. Let the supply house stock the product, that's what they are in buisness for and make sure your guys call in the order for willcall if they have to run. We figure a min time of one hr everytime a man has to go to the supply house. Keep the stock in the truck, it will get used that way, evn if it's not quite the right fitting, its cheaper to use two or three than to run and most times won't make any diff on how things work

Susan_6

Oooh JIT (just in time), I love it. If you can get your inventory delivered to you every day, you'll have money in the bank. Can you contract with your supply house to purchase X number of various items over the course of a year and lower your purchase price? If they know you will spend at a certain $ level each year they may be more flexible in servicing your trucks.

jim lockard

here, here

Stay out of the supply house. Supply house time is dead time maybe a little more on the truck then you want or need but pack it in if you do not have it you can not sell it and it costs to much to break camp to run and get it. I would wittle down the warehouse stock and put it on the trucks.

Steve_35

25% margin or markup? Net or gross? That's pretty skinny particularly for items you carry in your truck.

Richard_4

Inventory

I agree with alot of what you all have been saying .I wish that I can keep everyone busy for eight hours a day, but that is not realistic in a service business. Im hoping that with me in the office and a new marketing plan, the techs will be more productive and not have too much down time to spend at the shop or in the supply house.

jerry scharf_2

do you do after hours service

My $.02.

If so, you have to consider the range and amount of parts that are consumed after hours. The supply house and JIT is great when you can predict and plan things, but in the service business you never know what the next phone call will demand. You reall yneed to stock what it will take to get the majority of the after hours problems resolved without a "wait till the supply house opens tomorrow."

Ideally, this is all tied to the inventory system, but at the least you need to look through all the after hours calls for the last half year and see what gets used and in what quantities. If it doesn't move in 30 days, but does get a repeat customer back with heat, it can still be a money maker. You may need to bump the overhead fee on parts that sit, and that would be a reasonable way to keep the financials reasonable on these parts.

jerry