7 Essential Areas for Controlling Your Construction Inventory
7 Essential Areas for Controlling Your Construction Inventory

7 Essential Areas for Controlling Your Construction Inventory


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Managing your construction inventory is the key route in your construction business’s success because a well-managed inventory is crucial to your company’s profitability. Additionally, a project timeline planned, with complete inventory details of the required materials, equipment, labor, and many more, is considered critical to the project planning process.

Controlling your overall inventory allows you to efficiently manage the intricacies associated with optimal stock levels, maintain costs, and effectively report. Having complete control over your inventory is particularly important, especially when your company has multiple projects to manage, as the schedule may become more and more complicated.

In this blog, we’re going to discover seven critical areas that you need to focus on more in order to have a complete understanding and control of your construction inventory.

1. Preparation of Inventory Budget

There are many construction companies today that have an annual inventory budget. They are usually preparing in advance before the final inventory is procured. Any form of the budget must include the overall costs of ownership to keep inventory at the right place during the year’s account period. You have the choice to do the same thing, although it may depend on some factors. 

Take note that inventory includes fixed operational costs, material costs, logistics costs, carrying costs, additional miscellaneous costs, and redistribution costs that contribute to the overall cost of ownership. 

2. Setting up various Stock levels

The rest of the management should decide the minimum and maximum level of supplies and stocks that need to be kept in some particular warehouses or across the network of warehouse locations. You should have a team responsible for setting optimized re-order levels, average inventory level and safety stock levels to ensure that costs are contained. 

And the best way to supervise your crew members, whether to track or monitor their performance, is through the use of construction scheduling software. You can keep track of everything, including their labor hours, daily tasks and also their performance.

  • Minimum level

It represents the lowest quantity of a specific material which stick must not be allowed to fall. This is the level that has to be maintained every single time. Doing so will make the product not being exceptionally held up due to material shortage. The minimum level is the level of inventories where a fresh order should be necessarily placed in order to replenish the stock.

  • Maximum level

Maximum level refers to the level precisely above where stocks must never reach. This level is also known as the full stock or maximum limit. The primary function of the maximum level is crucial to avoid unnecessary blocking up of inventory’s capital. In addition to the capital, obsolescence of materials, losses due to account deterioration, the temptation to thefts, and extra overheads are included as well.

3. Establishing the proper purchase procedures

To ensure that your inventory is right under control, the management should employ procedures that align with the demand pattern data and actual sales history. Here are the following steps that are involved in the process.

  • Purchase requisition

It is the requisition being made by different departmental heads and storekeepers primarily for their several material requirements. The actual purchase initiation typically starts with the receipts of the purchase requisition prepared by the purchasing department.

  • Inviting quotations

The purchase department invites quotations, particularly for the supply of goods from the purchase requisition.

  • Schedule of quotations

The schedule of quotations is prepared by the purchasing department based upon the quotations received. 

  • Approving the supplier

The schedule of quotations is being placed right before the purchase committee, who is tasked to select the supplier. The purchase committee usually considers many different factors, including the quality and price of materials, delivery schedule, and payment terms.

  • Purchase order

Purchase is the final step and the purchasing department typically prepares it. There will be a written authorization to the supplier, stating to supply a certain quality and quantity of materials at a specified schedule/time and place. All details are mentioned at the agreed terms.

4. Inventory Turnover Ratios

The number of times the inventory should be replaced/changed during a given period of time (year) refers to inventory turnover. This turnover is one of the most generally used ratios when it comes to construction inventory management. It does reflect the supply chain’s overall efficiency, starting from supplier to customer. It can also be used either for manufacturing or retail.

This particular calculation is used to figure out how faster inventory is used up or “turned over” in a specified given time. So, the higher the ratio, the shorter the inventory’s shell life will be. As a result, it typically leads to increased sales volume and profitability for construction companies with low-profit margins.

Inventory turnover must be closely watched for each item in the warehouse. And over the course of the item’s lifecycle, demand may fluctuate, causing variability in the supply chain. That is why tracking demand patterns are necessary. It is one effective way to ensure that product replenishment calculations are optimized and accurate.

Most construction companies nowadays are frequently expressing their construction inventory as weeks or days of supply. The major advantage of this particular approach is that it can produce comprehensible values. Thus, providing an immediate point of comparison on the lead time. Another ratio is derived from the first and indicates how many days’ will it takes to sell the inventory finally. Once this ratio is finally applied to specific products, it is already called the Stock Cover.

5. Taking Care of Routine Maintenance

It would be best if you defined all the maintenance needs of every piece of equipment. However, in most cases, it creates headaches, especially for construction supervisors across all kinds of projects. Yet, without having proper maintenance, downtime can be far more likely to happen. Only automated scheduling in construction is commonly regarded as the ideal way to ensure each piece of equipment can receive the level of care it requires.

Additionally, whenever equipment is far away from a certain shop, providing care and maintenance even before the equipment is moved to the site can prevent potential issues. And while several types of equipment might be serviced efficiently on-site, others may require a shop setting to get the best results. That’s true, especially with major service needs.

6. Enterprise Resource Planning (ERP)

The ERP in construction helps organize and manage contracts between partners, subs, customers, vendors and employees. ERP in construction is built-in with all important features that are very helpful for any construction company. Enterprise resource planning facilitates collaboration between the project manager, the owner, contractors and subs with other project team members. It helps in keeping and storing all data about individual assignments and tasks. 

With all of the stored information, it becomes easier for a construction company to create a working project schedule. The project manager can further present this schedule to the owner in order to get approval. Moreover, baseline a project and preparing a schedule are considered two essential things that should be prioritized at the beginning by a project leader.

7. Deploy Inventory Management Software

Making use of a software tool is another helpful technique to exercise control over your construction inventory. The system’s main objective is to create accessible details about stocks and items’ value and quantity. Therefore, the software application can provide you overall control over stock of materials like physical stocks that can be regularly verified using the stock records. 

Are you looking for a better way to manage your inventory? Employ one of the top inventory management tools in the market today – Pro Crew Schedule. By having this software, you can able to track and monitor stock levels. You can quickly look at and access all product details using your smartphone and tablet. So when you think you need more control and access in your inventory, Pro Crew Schedule is the best inventory management system to try. 

Here are other benefits Pro Crew Schedule offers to your business:

  • All-in-one platform
  • Document sharing and control
  • Targets are achievable 
  • Crew and resource management
  • Time-tracking and monitoring
  • Efficient project management for construction
  • Real-time collaboration with your team
  • Easy to use and navigate
  • Cloud-based storage

If you’re exploring advanced ways for improving your company’s inventory, it pays to look carefully at the latest and best inventory systems in the market. To get started, check out Pro Crew Schedule! It delivers a reliable and convenient way of managing your construction inventory. Request for a FREE live demo and enjoy your 30-day TRIAL!

Key Takeaways


Think creatively and wisely when it comes to the best methods and systems for your construction company. You need to further know your company and its unique needs to deliver the best services possible to your clients. It is also essential to know the most critical areas to focus on, especially in inventory. Tracking inventory and having everything organized will make you a master every single time you execute construction projects.

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