Australian tradies need to pay close attention to inventory management to ensure their business remains profitable and successful. Without effective inventory management, they risk wasting resources and increasing storage costs because of overstocking or losing potential sales due to a lack of stock. By contrast, effective inventory management helps tradies keep track of the costs associated with their supplies while providing a means of streamlining operations and increasing customer satisfaction.
In this guide, we will provide an overview of the fundamentals of inventory management and outline best practices to help tradies optimise their inventory systems.
The first step to effective inventory management is to understand inventory. Inventory can refer to raw materials, finished goods, components, or a combination of the three. Raw materials are the basic components used to create products, while finished goods are the products that have been assembled and are ready for sale. Components are the parts and pieces that make up a finished product.
In addition to these, tradies may also keep an inventory of tools, equipment, and spare parts. These assets are essential for the completion of a job and must be managed in order to avoid delays or unnecessary costs.
No matter what type of inventory is being managed, all tradies should strive to make sure their inventory is organised, up to date, and easily accessible. They can start by creating a comprehensive list of all the items in their inventory and categorising them. There are different ways to do so, but some common methods include:
- By type of product (e.g., raw materials, finished goods, equipment)
- By location (e.g., on site, in storage, in transit)
- By value (e.g., high-value, low-value)
- By usage (e.g., frequently used, infrequently used)
Once tradies have a clear understanding of their inventory, they can establish systems for tracking and managing it. This includes setting up methods for controlling stock levels, ordering items, and monitoring performance.
Effective inventory management strategies
Inventory management is about maintaining adequate stock levels while avoiding overstocking or running out of materials. Tradies can use different strategies to control their inventory, such as:
- Implementing inventory tracking – Tradies should track their inventory levels at all times to ensure that they know when to order more supplies or adjust their stock levels. This can be done manually or with the help of specialised software. For easier tracking and identification, tradies can put barcodes, serial numbers, or QR codes on their assets.
- Setting reorder points and safety stock – Reorder points and safety stock help tradies determine when they need to place orders for new supplies. Reorder points are the levels at which new items should be ordered, while safety stock is an additional amount of inventory that should be kept on hand in case of unexpected demand or supply shortages. By setting these levels, tradies can keep their inventory levels consistent and avoid stockouts that lead to missed sales.
- Using a just-in-time (JIT) inventory system – JIT inventory systems are designed to reduce the amount of inventory on hand by ordering supplies as they are needed. This limits the amount of stock that needs to be stored and tracked, as well as the costs associated with storing and shipping items.
Depending on their individual needs, tradies may find that a combination of these strategies works best for them. They should take the time to consider their inventory levels, customer demands, and budget before deciding which strategies to implement.
Efficient supply chain management
In addition to inventory control strategies, effective supply chain management is essential to optimise operations. Supply chain management involves the coordination and integration of all the stages of the product development and delivery process, from the sourcing of materials to the delivery of finished products to customers.
Some common supply chain management strategies include:
- Managing vendors – Tradies must ensure their vendors are reliable and provide quality materials in a timely manner. They should form relationships with trusted vendors and negotiate favourable contracts that offer the best prices and terms. Regularly evaluating vendors and their performance is important to maintain the quality of materials and services.
- Streamlining ordering processes – Streamlining ordering processes helps tradies reduce the amount of time spent on ordering supplies and materials. One way tradies can streamline processes is by using automation software that can help speed up the process and ensure accuracy. Additionally, consolidating orders can minimise costs associated with shipping and handling and optimise delivery schedules.
- Optimising inventory storage and handling – Tradies should create an efficient system to store items in an organised and accessible way, as well as implement strategies for tracking and managing inventory levels. Additionally, they should create procedures for handling and shipping inventory to keep items safe and minimise losses.
Tradies can also benefit from implementing waste reduction strategies into their inventory management process. Some effective ways to reduce waste include:
- Minimising stock obsolescence – Tradies should keep up to date with current market trends and customer demands to avoid having obsolete inventory on hand. Offering discounts or promotions can clear excess inventory and prevent it from becoming outdated. Tradies can also adjust procurement strategies to avoid overstocking items with short shelf lives.
- Repurposing materials and components – Unused or defective items can be used in other projects, and scrap materials can be sold. Repurposing also helps tradies get more value out of their inventory.
- Implementing inventory audits – Regularly conducting inventory audits is a great way for tradies to ensure their inventory levels are accurate and up to date. Audits allow them to identify any discrepancies or issues with the inventory and help them find opportunities to reduce waste.
How a job management platform can help with inventory management
A powerful job management platform like WorkBuddy can help tradies streamline their inventory processes in the following ways:
- Automating inventory tracking and management – WorkBuddy’s intuitive dashboard makes it easy to keep track of inventory levels and stock movements. With real-time data, tradies can easily monitor inventory performance and make informed decisions on when to order new supplies.
- Enabling collaboration with suppliers and customers – WorkBuddy’s communications tools make it easy for tradies to share data with suppliers and customers. This helps them keep track of orders and deliveries, as well as coordinate with vendors, to ensure materials are available when needed.
- Providing a central repository for inventory data – WorkBuddy’s centralised platform ensures all inventory data is in one place. This makes it quick and easy for tradies to access information such as stock levels, orders, delivery dates, and more.
Overall, effective inventory management requires tradies to have a clear understanding of their needs and the tools available to them. By implementing the strategies outlined above and leveraging a complete job management platform, tradies can keep their inventory processes optimised and get the most out of their resources.
Don’t let inventory management be a headache. Book a free personalised demo of WorkBuddy today to see how it can help you streamline your processes, reduce costs, and improve your bottom line.