If you want to compete with the big boys, you have to act like the big guys - and one thing they're doing that you're probably not is carrying stock.
Just imagine: instead of running to the local hardware store or ordering parts online every time you started a new project, your engineers could just pull the items they need right off the shelves of your fully stocked, impeccably managed warehouse.
That definitely sounds dreamy, but for many small- and medium-sized field service businesses that's all it is—a dream. Let's come right out and say it: Stock control is no fun, and it can cost your company more money than it saves.
Here's why plus what you can do instead:
1. Your engineers aren't stock specialists (nor should they be).
2. Carrying stock is expensive—at least at first, and definitely if you do it wrong.
3. Your vans may turn into mobile (and untrackable) warehouses.
4. You may find your company's stock for sale online.
5. How to Compete with the Big Guys - Minus the Hassle
Imagine one of your field service engineers is rooting around the stockroom for an evaporator coil. He finds it and is about to head off to install the part for a customer. Which of the following do you predict will happen next?
(A) Your engineer carefully scans the evaporator coil's code into your costly, complicated stock tracking system. (Or keys it into a tablet, or writes it legibly on a paper form.)
(B) Your engineer scribbles the part information onto a corner of his job sheet, where it languishes forever.
(C) Your engineer whistles as he saunters out of the stockroom, thinking about the upcoming installation.
If you answered (B) or (C), congratulations: your company, and your engineers, are completely normal. However, these answers also demonstrate another roadblock field service businesses face when attempting to carry stock. Unless you want to be breathing down your engineers' necks at all times, or spend a lot of time and money on training, your engineers are too focused on serving customers to worry about the niceties of stock control.
Even larger businesses have trouble training their engineers to consistently track the parts they remove from the stockroom, and they end up with an expensive mess on their hands. The best solution, which some large companies do, is to hire and train employees who are dedicated strictly to handling stock. Do you have the time or resources for that? (Answer: Probably not.)
Dedicating a stockroom to parts has a big up-front cost: extra overhead (you'll need to invest in shelving units, heat and cool the room, etc.), interest on the debt you take on to purchase all that inventory, higher insurance premiums, and more.
Mike Sowinski, CPA/ABV, Principal at CFO Consultants, tells the sad tale of what often happens once you have a nice warehouse or storeroom full of parts. 'Every engineer will begin to have their own little store of parts in their van. Then the vans get fuller and fuller, and there are all these costs going out', he says. What happens then is you'll have stale stock or the wrong kinds of stock on these vans, and you end up throwing out a bunch of it'.
Not to mention, if one engineer has commandeered, say, all the fill valves, when another engineer needs a fill valve he'll requisition a new one, not knowing his fellow engineer has a van full. Also, eventually you'll have to have an employee take a tally of the stock on each truck to straighten out the mess, adding even more cost and labour to the situation.
No one likes to think that their employees may be stealing from them, but it can happen if you carry stock without vigilantly keeping track of it. 'One of my clients had that exact scenario, where someone had stock in their van and they would just keep replenishing it—but they were really selling half of it online', says Sowinski.
We've spent a lot of time panning the idea of carrying stock for small- and medium-sized businesses, so you're probably wondering how you can possibly compete with the larger field service companies and their brimming warehouses.
Guess what? Not attempting to play 'my stockroom is bigger than yours' with larger competitors can actually make you more competitive.
While huge companies with their overflowing warehouses might be drowning in stock and the associated costs—and still coming up empty-handed when a customer project requires a part they don't have—your company is nimble, able to order just what you need just when you need it. You can dedicate the time and resources that would have gone to stock control to serving your customers better than anyone else.
If you really want to go toe-to-toe with the big guys, however, you'll need something bigger - and better. Commusoft is getting ready to launch the much-awaited Stock Management feature. Find out all about it by attending the exclusive May Product Round-Up, at our London office. Click below to register - we only have 100 seats and they're going fast!