Inventory management plays a crucial role in a business’s profitability. However, this is often overlooked, making it one of the biggest challenges in the construction sector. No matter how small or big or business is, it’s important to have a complete list of the products that you have—whether they are company assets or goods to be sold.
Performing physical inventory can help make your warehouse organized and can even improve production workflow. It also helps you anticipate or prevent shortages and logistical problems. Follow these tips for efficient construction inventory management:
- Conduct An Audit For All Products On Hand
One of the reasons why construction businesses experience unforeseen shortages of supplies and materials is because of erroneous inventory. If you’re handling a lot of supplies and materials, it can’t be avoided to have some discrepancies on the count of these assets. Conducting a regular inventory lets you see products that need replenishing to prevent supply shortages.
Before conducting an inventory, keep track of all the products that you have. Make sure that each type of item has SKU’s, supplier’s name, barcode data, and other essential information that can help organize your data. If you don’t do your inventory, you would never know if you’re incurring losses or if there are missing items or products from storage.
- Incorporate The Use Of Technology
The construction industry is one of the least digitized sectors. To make inventory tracking easier, faster, and more accurate, using management software could be of great help. One of those is an RFID (Radio-Frequency Identifications) scanning system. Through an RFID scanning system, time-consuming manual tasks could be easily automated, and you’ll be able to get real-time reports about the available items you have.
If you have field workers, information and updates about the inventory are easily accessible through the RFID system even when they are out of the office. Aside from providing an accurate report, the incorporation of technology in inventory management guides you to follow safety compliance in handling all items to be recorded.
- Proper Stock Control
One of the reasons why inventory management is important in a construction business is because of stock control. Overstocking and under stocking must be avoided. Through efficient inventory management, you can have a balanced supply and demand ratio. Overstocking could be more complicated to manage, while under stocking may cause customer dissatisfaction.
If you’re already familiar with the stocking pattern in your company, you’ll be able to perform demand forecasting accurately. When you do inventory management, you’re not only productive in controlling stocks, but you’re able to attend to logistical problems like issues with the supplier or your shipping partner.
The supplier’s performance must also be gauged regularly because they play a significant role in your ability to stock products. If your supplier is unreliable, it may greatly affect your inventory that may cause delays to your business operations.
- Choose The Right Inventory Method
One of the important things to consider if you’re to do an inventory is to know which method is suitable for your business operations. This can help ensure that your company’s assets are secure and well taken care of. The common construction inventory management auditing techniques used by site managers are the following:
- Physical Inventory Counting – This inventory audit is done by manually counting all the items that you have on hand. In a physical audit, the actual count of the supplies you have is compared with the total number of the forecasted amount of inventory you needed in the operations.
- Inventory Layers – The common inventory layer used in the construction industry are the FIFO (First In First Out) and the LIFO (Last In First Out). The prices of the supplies change over time, so the inventory management to be used would depend on the inflation or the increase of prices of the products.
- Specific Identification Method – This method is where you record each item with its corresponding cost. If a particular item was used or sold, its cost is automatically deducted from the balance—helping you keep track of your numbers accurately. However, this method is only applicable for small businesses or if you only need to keep track of a few items.
The main goal of construction inventory management is to promote record accuracy, achieve productivity, improve customer satisfaction, and automate manual tasks. For efficient construction inventory management, you may conduct an audit inventory of the items on hand regularly, utilize a management system software, familiarize stock control, and choose the right inventory method for your construction business.