Tricks of the Trade

Why does parts inventory management matter to contractors?

 

Imagine an HVAC contractor showing up to their first service call of the day during peak summer season. The forecast is calling for temperatures to reach triple digits by the afternoon, and the hot weather is causing air conditioning unit breakdowns. Their first customer is experiencing just that, and so are all the other customers in line for the day. The contractor inspects the unit and sees it needs a new condenser fan motor. The contractor normally keeps HVAC repair parts stored in their work van, but they happen to be out of the type of motor needed for the customer’s unit.

The contractor checks with their shop and they’re out of motor as well. The technician will now have to make a trip to their supply house. It’s on the other side of town from the customer’s location, and the trip takes an hour and a half out of their day. By the time they get back, the customer is still hot and annoyed, and the contractor’s phone is ringing off the hook with other customers expressing frustration that their air conditioning is out. If the contractor had a parts inventory management system in place, they could have had the right condenser fan motor on hand and avoided wasting time and resources.

When it comes to service calls, time is money. Whether you own a business with one truck or have a crew driving a fleet of trucks with your company’s name on it, having a parts inventory management system is essential for working more efficiently. Explore parts inventory management best practices and tips from other contractors, and see why investing in a system can pay for itself in short time.

Parts inventory management best practices and tips for contractors

  • A parts inventory management system can be simple or sophisticated. Whether you use a handwritten checklist or a state-of-the-art cloud based software program, just having a parts inventory management system can make a difference in the number of service calls you’re able to complete in a day. The focus should be on customizing a system based on what works for your business. HVAC contractor David Eckenrod has found what works for him.

    “We’ve had our checklist and consignment system for years and it works great” David said. “We created our own checklist of parts and developed our own minimums and maximums needed for our company.”

    Another inventory management best practice is to periodically assess how your system is working, and make adjustments as needed. HVAC contractor Eric Warner has had more than one inventory management system over time.

    “We have had several inventory management systems in the past, and while they were beneficial, they did not meet all our needs. We have moved to a cloud based software program that will work very well for us,” Eric said.

    Pro tip: Using field services management software can help you run the business-side of your contracting business more efficiently, including inventory management. Learn more about the benefits of field service management software.

  • Service demand and parts inventory management are closely connected. Knowing what products are used most often will give contractors the information they need to know how many parts they should have on hand. A parts inventory system manages the service demand of your business, so you never have too many or too few in the quantity of any service parts or supplies. HVAC contractor Shaun Murphy recognizes the connection between service demand and inventory management.

    “Our system tracks what is coming in and what is going out, and we replenish the parts we need to meet service demand,” Shaun said.

    By setting aside the time to check inventory levels, contractors can be prepared with the parts they need to keep up with service calls. HVAC contractor Michael Glines has made inventory management a daily part of his operations.

    “It’s simple and it work for us because we pay attention to it every day. If you know what you have, you know what you need,” Michael said.

    Pro tip: Selling service contracts are a solution for keeping service demand at manageable levels. See why service contracts work for any HVAC business.

  • Suppliers can help with a successful inventory management system. As mentioned above, knowing what products are used most often is a key component to a parts inventory management system. Finding out what those products are could be as simple as checking with your supplier. In fact, working with your suppliers can help you streamline inventory replenishment. David Eckenrod buys parts on consignment from some of his suppliers.

    “We set up a consignment program with our top three suppliers, and their inventory sits in our storage room until we need it. We use the checklist to pull what we need, and every couple of weeks the supplier comes out and does a count and bills us for what we sold,” David said.

    Eric Warner also works with his suppliers to keep inventory stocked.

    “We have the system set up with a default vendor for each part so compiling an order to replenish our inventory is easy,” Eric said.

  • Mobile inventory needs to be managed too. Having the right parts on a service van or truck makes service calls go smoothly. A fully stocked service van also means fewer trips to the supplier or warehouse, which can lower fuel and vehicle maintenance costs. Shaun Murphy’s mobile inventory management system helps him know when it’s time to replenish inventory.

    “Each of our service vans has their own inventory management system so when a part is used on a service call, it’s scanned and tracked as sold,” Shaun said.

    Eric Warner treats his service vans like mobile warehouses.

    “Essentially each of our service and installation vans are their own warehouse with their own inventory, so we can track which truck sold what part.”

    Pro tip: Work vans that are organized for maximum space efficiency can haul more parts. Get tips to help you organize your work van.

Inventory management is a powerful tool that can help control inventory and operating costs, minimize time spent on service calls, and provide a better experience for customers. Explore more ways to work more efficiently and grow your bottom line with other contractor articles featured in the Ideas & Learning Center.