One of the biggest challenges of a growing construction company is managing construction site inventory.
Inventory management in construction is a means by which contractors and suppliers can keep track of material, workforce, schedule, and activities on and off-site. This is particularly vital when a construction company manages multiple projects, and efficient scheduling might not be sufficient for all the works to go smoothly over time.
A well-managed and organized inventory can be extremely vital to a company’s profitability as misplaced and lost items can incur unavoidable delays and unnecessary additional costs in a project. A project timeline, planned ahead of time, with a complete inventory of the required materials, workforce, and equipment for the whole operation duration, is essential in the project planning process.
Having a sound management system in the inventory allows a company to manage the details and intricacies associated with maintaining costs, monitoring stock levels, and effective reporting. Especially during peak season in construction, which inarguably the most critical time of the year, it is pivotal for companies to have proper inventory management to succeed.
Before we head on the details on how your company can prepare for the peak construction season of the year, let’s first have a refresher on the most critical thing to keep track of at all times of the year— your inventory.
What Is Construction Inventory?
According to statistics, 60 percent of costs within the construction industry all comes from bill of materials. This shows how effectively managing tools and inventory can dramatically impact the overall cost and profit of a company. Since construction projects use many materials, one of the project manager’s responsibilities is constantly juggling various moving parts. However, this can be streamlined through a good inventory system.
A good inventory system would help you keep track of supplies on hand, minimum and maximum inventory count, bill of materials, and easily tracks what a company purchases from multiple suppliers. Using a shortcut in dealing with inventory can make your company vulnerable to costly damages. Managing supply levels is crucial to ensuring that a project is delivered on schedule and within the planned budget. This involves knowing the correct quantity of supplies to carry to avoid incurring substantial carrying costs, at what level of inventory to reorder the supplies, and keeping supplier lead times in check.
If all these feel overwhelming, don’t worry because we’ll give you ways to streamline your inventory processes, whether you are only starting or just wanted to improve the system you currently have.
6 Surefire Ways to Streamline Your Inventory Operations
1. Regularly Audit Your Material Supplies
Many construction inventory issues on site come from inaccurate data, which causes site engineers to make mistakes and commit wrong decisions at work. Poor record-keeping can eventually result in unforeseen inventory shortages and unaccountable supply deficits, all of which can prove fatal to construction companies. In order to have an accurate perspective of your inventory levels, you need to schedule regular inventory audits in your calendar. For construction projects, this comprises taking a look at your materials as well as your tools, equipment, and consumables.
There are inventory auditing techniques available to construction professionals on site. The most conventional method is conducting a physical audit, which includes a comparison of the initial inventory forecast amount and comparing it to the actual quantity of inventory you have on hand. Other techniques involve using sampling methods such as cycling counting, which helps ensure correct inventory levels between construction projects.
2. Consider Investing in an Inventory Management System
Various technological advancements have been developed and widely adopted in the construction industry; from lean management to workforce processes, companies take advantage of these innovations to streamline their work operations. As a matter of fact, the whole process of managing construction inventory can be made more efficient and more convenient with the use of inventory management.
Such digital application software includes multiple features that enable construction companies to manage inventory on numerous construction projects, optimize categorization and supply storage locations and track changes in quantity levels on a central digital platform. Additionally, many inventory management systems also provide tracking technology to monitor shipments coming from different suppliers and materials moving from one site to another in real-time.
3. Consolidate List of Supplier Delivery Centers
Keeping a bottleneck in your construction inventory will harm your project operations, which may result in problems in your cash flows. In instances when there are inventory issues, it is crucial to have a good network of the supplier who will support you when asked for help as soon as possible. Because of this, it a recommended practice to maintain a list of the delivery center of a supplier, especially when your business relies on third-party vendors.
Having supplier contact information and addresses lets you manage delivery times in case there is an inventory shortage. Take note of vendors who can accommodate last-minute and rush delivery services in case of tight deadlines. But most importantly, make it a point to develop a good relationship with your suppliers, for this can also be a foundation to your company’s success.
4. Incorporate New Technology to Guide Inventory Management Processes
Apart from a central inventory management system, there are various new technologies that you can incorporate to improve your logistic tracking and supplies management. Mobile phone scanners are a low-cost option for tracking inventory. Since most construction employees possess a smartphone, all you need to do is provide them with an application they can download to use as a scanner. Another example is using an RFID solution to track high-value assets across multiple construction sites and storage locations. This will enable you to know where the tools and equipment are located, reducing the need to rent tools as a replacement for those you can’t find.
With the complexity and size of many construction projects, inventory management might feel like a challenge. However, with the proper practices and strategies you can implement, you can streamline and simplify this daunting task in a matter of time.
5. Always Be Updated on What Materials and Supplies You’ve Got In Stock
Inventory, in one sentence, is just a constant balancing act. You might be wondering when exactly can you say that you have the right amount of supplies and equipment to get the job done and when you already possess too much. Keeping a stock of excess equipment might be able to save you from unexpected problems that might arise on site, but having too much means money down the drain.
Instead of over-ordering for the just-in-case scenarios, you can come up with keeping an updated record of information of your resources, such as the quantity and its location. With the right inventory management software, every can of paint, every piece of plywood, every spool of copper wire will be accounted for in real-time, without hours of traditional inventory tracking time.
6. Get the Whole Team Accountable of Updating the Inventory
When it comes to teamwork dynamics, accountability has always been a key factor in making it work. To streamline the inventory accountability aspect in your company, it would help provide them with a simple solution where doing tasks won’t feel like a chore and would just take a fraction of time to do.
This could be done by implementing an inventory management solution that could streamline all the points above that can also better accommodate the high demand and fluctuations throughout the seasons, something that spreadsheets could never do.
What To Do During Peak Construction Seasons?
Peak season is arguably the most important time of the year for business, especially in the construction industry, where the demands are never faltering. It’s the time of the year when most businesses make the bulk of their yearly revenue, so having a good inventory system is to make it or break it for any industry.
If you are heading into your first peak season, here are additional tips we can give you to prepare you and give you an edge over your competitors in the business:
- Conduct frequent cycle counts to ensure that all inventory levels are accurate.
- Make sure that shipping supplies are appropriately stocked and ready to use anytime. Yes, inventory supplies should be inventories as well.
- Consider hiring temporary work staff to account for higher demand orders.
- Document and utilize history reports to make sure that you’ve ordered the correct quantity for your inventory.
- Ensure that all inventory, including picking and backstock, are stored in safe and proper locations.
Inventory is considered the biggest asset to your company, so in order to save and make money, you need to protect your asset and constantly nurture it in the right direction. Without implementing inventory management solutions, you will never get ahead of your competitors in the industry.
Pro Crew Schedule is user-friendly and straightforward project management for construction software that includes an inventory feature that enables you to visually track all your supplies and any of their prices, quantity, supplier, and location— for a more intuitive way of tracking inventory with your construction project team.
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