Inventory tracking and management are crucial to the success of any business. According to data, holding dead inventory can cost 25% to 30% of buying the unit. For an electrician business, you do not want to incur these hefty costs on your bottom line, impacting payroll and service delivery to your customers.
Your inventory tracking process affects more than just the dead stock in your warehouse. Poor inventory management can also cause service delays, with customers waiting prolonged for a part to be shipped to your warehouse before their work order can be completed.
So, how do you closely monitor your inventory using the best techniques and software? Here’s what you need to know.
Why Inventory Management is Crucial for Electricians
An electrician’s inventory is one of their most valuable assets. Inventory for an electrical business holds tools, equipment, and parts necessary to complete work orders and offer smooth customer service. A shortage of inventory or dead stock usually leads to financial losses due to high shipping costs, poor clearance sales, and reputational losses due to poor service delivery.
Electrician businesses can also view inventory as a liability. With a large inventory, your business carries a higher risk of theft, spoilage, damage, or demand shifts. Consequently, you’re also subject to hefty insurance premiums.
An electrical business needs to know when inventory should be restocked, how much should be added to stock, how much the new inventory should cost, and when it should have left the warehouse to fulfill a work order.
Making these decisions can be rather complex, especially if the office admins or techs have to manage and track inventory manually using Excel sheets or other paper-based methods.
The Challenges Electricians Face in Inventory Control
Manually managing inventory in an electrical business comes with a ton of challenges. Here’re the most common ones.
Manual inventory tracking processes and techniques produce inconsistent results since they’re easily vulnerable to errors. A centralized inventory tracking system with accounting features deals with this challenge while reducing the labor and time demands of tracking inventory manually.
Most electrical businesses struggle to identify and locate inventory in the warehouse, often leading to delayed work order fulfillment since techs cannot quickly and reliably access the tools, equipment, and parts they need.
Limited visibility also leads to inaccurate, incomplete, and delayed shipments.
Manual inventory management scales poorly as warehouses and customer job requests increase. These processes are also tedious, putting a sustained strain on your techs and office admins as the business grows.
Best Inventory Control Practices for Electricians
Regardless of the inventory management and tracking technique you choose, using the best practices will help improve the process in your electrical business. Here are three of the most impactful ones:
Identify Products with a High Potential to Reduce Your Inventory Effectively
Most inventory management systems and software rank products based on their cost of goods sold. The higher the rank, the more the product contributes to your business’s sales.
Highly ranked products give the best opportunity for reducing and improving your inventory since they don’t last in the warehouse for too long. Therefore, they should account for the largest stock in your warehouse compared to slow-moving, lowly-ranked products or units.
Have an Accurate Demand Forecast
Despite the push inventory management strategy being the most heavily reliant on accurate demand forecasts, the other techniques, such as just-in-time, can also benefit greatly.
Demand forecasts give you insights and predictions into the quantity of each stocked unit you’ll need to sell to a customer or use in the future. These forecasts allow you to keep the best inventory levels, with businesses using the just-in-time technique getting to plan with their partners much better on when they can expect demands for the products or units to rise and by what levels.
Regardless of your inventory management technique, manual inventory management and tracking will always be time and labor-intensive for your electrical business.
Software helps you automate repetitive tasks, get accurate demand forecasts, and integrate accounting into inventory management to ensure office admins can easily assess business costs with changing inventory needs.
The techs can also easily communicate inventory needs on the field with the office admins, ensuring smoother service delivery and customer satisfaction.
Good Inventory Management Will Save You Money
Successful electrician businesses have aced inventory management using proper techniques and software. Consequently, they have a more positive cash flow and brand sentiment from customers. Contact a professional today and learn the solutions your business can implement.
Garrett Wilson is the President and Co-Founder of FieldBin. FieldBin is a field service management software designed for trade business owners. The electrical contracting software allows professionals in the fields of Plumbing, HVAC, Electricians, Roofing, and Commercial Cleaning to solve their back-office nightmares quickly. Garrett has expertise in Marketing and Project Management, with experience in multiple industries, including cyber security, healthcare, and manufacturing.