7 Costly Inventory Management Mistakes

Today’s most competitive service providers are built to manage inventory for maximum efficiency and profitability. By implementing a complete business management software specifically for field service providers with an inventory management component, these organizations establish and maintain appropriate inventory levels in their fleets and (for some) warehouses. The technology enables them to offer superior customer experiences while delivering optimum net savings for the business.

Inventory management solutions bring high-level intelligence to maintain the profitability balance of stock parts and supplies. Technology allows factoring in complex variables such as available space, insurance, and interest on borrowed funds. Using the software as part of an integrated solution results in superior customer service, less warehouse labor and costs, consistent on-time deliveries, efficient demand and order management, maximized space usage, and improved cash flow.

Field service providers operating without inventory management expose themselves to a wide range of debilitating business outcomes, including the following:

1. Holding excess stock: Holding onto excess stock is one of the most common issues plaguing companies without modern software that keeps track of every piece and product. This lack of insight often results in reordering materials too early or in higher quantities than necessary.
2. Hours of manual work: There are still many service providers operating with obsolete software or worse, using spreadsheets to try to manage their inventory. These companies waste time and money on redundant data entry, manually sifting through paperwork, and fixing errors. The software doesn’t keep track of inventory in real-time, which results in mistakes.
3. Lack of training: There are plenty of clunky inventory management software packages available, and many come from vendors that do not offer virtual or in-person training or online resources to help employees get up to speed. Lack of integration with other company functions like accounting adds confusion and redundant data entry. Most businesses cannot afford the time it takes to learn complicated software, train their own employees, solve problems related to lack of integration, and figure out what went wrong when mistakes ultimately arise.
4. Over- or under-ordering: Once-a-year inventory audits help keep track of items, but unless you want to tie up your staff doing this chore every month and you trust that everyone is counting correctly, you simply can’t rely on stock quantities. When you are unsure about how much inventory you have, it’s easy to tie up cash by ordering parts that are not needed or if you run out of stock, you can’t provide an accurate timeline for delivery, service, and installation.
5. Losing track of items in inventory: Without an accurate inventory count, it’s easy for to lose track of parts and supplies. Whether a part was used as an extra on a job, or it “fell off the truck” your insight into the true cost of jobs and inventory is skewed.
6. Lack of data on selling performance: Speaking of a lack of insight, without an accurate inventory management system, the cost of any job can be way off. In today’s competitive environment, you have to be able to anticipate – not simply respond to – customer demand. Buying parts retail because you’re already at the job site or not getting accurate counts from employees on parts use all contribute to your ROI.
7. No performance metrics: Without an understanding on fill rates and inventory turns for all stock, at all locations including trucks, you’re losing profits. You should know when orders are coming in and when they’re going out.

In today’s competitive environment, the margin for error is too slim to take such risks. As part of a comprehensive solution, strong inventory management enables your executives to set standards and closely monitor and improve performance over time.

The best inventory management software integrates with Internet of Things (Iot) devices to track inventory that moves from the store or a warehouse to fleet trucks, and tracks when items are sold. It also supports just-in-time (JIT) ordering, which assures technicians have the parts and supplies they need, when they need it, without tying up cash in excess stock.

Real-time inventory monitoring at all locations empowers residential service providers to meet market demand while minimizing tied-up capital.

Learn more about how ECI’s business management software can help you automate and streamline all inventory functions, reduce or eliminate mistakes, and spend far fewer hours on managing inventory– with much more accurate and reliable performance.