A lot of processes for tradespeople involve stock. Whether you’re purchasing or selling, managing all your stock is key for keeping everything in line. We’ll be going through what inventory means for businesses, as well as how you can improve your inventory management.
What is Inventory?
First, let’s cover what we mean by inventory and what it means for field service businesses.
Inventory refers to the goods or materials that are intended for sale to your customer base for profit. The type of inventory differs depending on what your business supplies, but it can include raw materials, component parts and goods that are ready to be purchased.
All these types of inventories are important to track and manage for businesses to run smoothly, so now let’s explain that.
What is Inventory Management?
Inventory management is a key process in the supply chain that refers to the management process for tracking your inventory. It entails inventory visibility which, in turn, involves the knowledge of how much inventory you have and where you store it.
Track everything that you purchase from suppliers all the way until the sale. This helps you build trends and stay ahead of the curve when it comes to repurchasing and restocking.
Why is Inventory Management Important?
So now we’ve cleared up the basics of inventory management, why is it important for businesses? Here are the top benefits of efficient inventory management for the field service industry.
1. Helps you stay in the know
First and foremost, managing your inventory means you have total visibility of what inventory you have. That can include where it’s all stored and how much you need of each product. This way, you can confidently provide quotes knowing that you have the right stock required.
It’s also important to always be aware of where you store your stock. You might have inventory stored across multiple locations – be that multiple stores, warehouses, offices or sites. Knowing where everything is stored removes the stress of travelling around to find that one item.
Being on the go all the time, you might also use your vehicles as storage locations. Keeping track of these locations helps you know whose van has all those cleaning wipes, cable clips, ladders and everything in between.
2. Improves customer satisfaction
Faster order fulfilment and more accurate job costing and estimating will have a positive impact on customer service. Customers are more likely to pay on time, leave shining reviews, refer you to a friend and come back again in the future.
Higher customer satisfaction then turns into repeat work and a competitive advantage. Keep your engineers busy and keep the jobs coming in.
3. Makes restocking straightforward
With a better knowledge of your stock, you can efficiently carry out restocks to avoid running low on what you need. It means you can also plan ahead for the next time you need to restock.
You have a better idea of how often you need to order and how long specific inventory lasts. Being aware of these kinds of trends and expiration dates also means you prevent wastage.
4. Maximises profits
With more efficient forecasting in place and a better understanding of what you have available to sell, your cash flow is more balanced. Inventory management keeps you on top of expenditures and potential income.
Not only does it improve your cash flow, but it also saves you money in the process. You don’t need to overspend on additional storage for excessive stock. With the right amount of inventory – not too much, not too little – you have better control and are less likely to deplete your budgets.
How to Improve Inventory Management
Now we know why inventory management is vital for businesses, you might be wondering where to start. Here are some key starting points to help you improve inventory management.
1. Track the right information
There are so many details you can keep a record of when it comes to stock, but what is useful to track? It might depend on what kind of stock you manage.
It’s essential to take note of the right information to help speed up future processes – including restocks and annual reports. Identify what’s important to your business and make sure to track the correct data. That could be the serial number, brand name, purchase date, warranty expiration date and much more.
2. Utilise inventory accounting methods
There are a few different methods that will help you accurately record your inventory costs with stock control software. One of the most common being first-in, first-out.
The first-in, first-out (FIFO) method for stock control essentially means that the first item purchased is the first one used or sold. It’s a common method that assists with inventory accounting that assumes that the first items you sold during a period would be the oldest and therefore the earliest cost. Generally, these items might be lower costs due to inflation.
It’s worth exploring different accounting methods to find the best fit for your business. The FIFO method might not be viable for all companies, and you may in theory use a mix of old and newer inventory. This method helps track the cost of goods sold (COGS) for your business.
3. Set up notifications
Custom notifications can help you stay informed when stock is getting low. By creating your own notifications, you can choose exactly who receives the alerts and where. It could be a text, email, internal software notification or a message to a Microsoft Teams channel.
With notifications or alerts in place, you can stay on top of inventory levels and be in control when items need to be reordered.
4. Report on your work
Once you’ve got a hold of your inventory management, be sure to build reports and analyse its performance. If you find that you’re waiting too long for your stock to arrive, it might be time to find a new supplier or carry out restocks earlier.
With customised reports, you can also quickly find the information you need about your current inventory. See how much you have stored at each of your locations to prevent items from going missing.
Every business is different when it comes to inventory, so analysing your data and trends will help you to optimise inventory levels and anticipate your inventory needs.
5. Link with your accounts
With service management software, you can integrate with your accounting software to ensure all your documents are linked. Connect to Xero, Sage or QuickBooks to import your contacts and post invoices and credits to your accounts in a few clicks.
This not only saves you time going back and forth between programs, but it also keeps data up-to-date and consistent across all databases. It helps with your stock management because you have reliable documentation for purchases and sales.
6. Invest in the right software
All these steps on how to improve inventory management might seem like a big undertaking. But that’s where digital inventory solutions can help. It’s important to put an inventory tracking system in place that works for your business structure.
You might already be trying to use spreadsheets for tracking your inventory, but you’ll quickly realise that it doesn’t scale with your business. They might help you track your incoming and outgoing stock for a while, but it takes a lot of manual input and constant updating.
Inventory Management Software
Inventory management software takes care of storing your inventory for you. So you don’t have to worry about finding where you saved that spreadsheet or doing any daily manual checks.
It also takes the stress away from trying to remember where you’ve stored specific inventory. Document everything so your team can easily find the details they need, without delays or long email threads.
Service management software has modules to assist with every stage of inventory management. From inputting and tracking stock details to running stock checks and adding them to jobs and quotes. Inventory management is evident across many stages of job administration and service management software makes that straightforward.
Further reading:
- IBM: What is inventory management
- Shopify: Inventory Management Defined: What it is and How it Works