Essential Tips for Managing Your Construction Company's Inventory
Construction and inventory don’t always go hand in hand, but it’s important to understand your company’s cost to acquire products as your largest expense.
For construction company owners who don't utilize an effective inventory management system to track demand, sales, and delivery processes, unused materials can lock up a large portion of your cash. That portion frequently represents cash that might be better spent on other business assets.
The Dangers of Neglecting Your Inventory
Construction companies that ignore inventory become easily susceptible to data entry errors, purchasing mistakes, and unreliable information about what they actually have on hand. With such mismanagement, you're setting yourself up for customer dissatisfaction. When it comes to construction, your inventory needs may be significantly different than your business or manufacturing counterparts, so it is important to understand how this process could work for you.
Take Steps to Improve Your Inventory Management
Fortunately, you can take a few simple steps to ensure that you're maximizing inventory management. You can start by focusing on these four aspects:
- Being frugal. You not only will spend less money, but also can identify effective ways to keep your costs down.
- Tracking costs. Don’t guess, track your costs as accurately as possible. The total cost for labor and materials necessary for the finished product is essential, so set appropriately competitive prices for your customers that can provide you with a healthy profit.
- Manage materials. Consider looking into tracking software that can provide an efficient inventory tracking solution appropriate for the construction industry. Many options are available, so do your research to determine the best options for your specific needs and budget.
- Review needs. You can monitor the types of projects you work on regularly and track the demand and product life for everything you purchase and use. This also will help you determine patterns so you aren’t caught off guard when needs arise.
Committing to these practices should put you in a better position to weather lean times as well as to take advantage of robust periods in construction. The primary goal is to leverage a clear perspective and understanding of your materials control to make informed decisions that will strengthen and increase your competitive advantage.
Call us today to discuss your inventory strategies.