Inventory control has, typically, been a challenge for many companies because inadequate inventory control leads to reduced profits and time delays. There are a huge number of parts that need to be available and the more trucks you have, the more complex the job becomes. Each truck is similar to a retail store location; you can’t sell what you don’t have in stock (or you incur large delays and the resulting customer problems from runs to a supply house).
Though it is not a glamorous task, good inventory control can significantly reduce some of your headaches and increase the money you keep from your business. That’s where the Smart Trucks come in. Let me show you how we transitioned our procedures from the old, manual systems to a modern, foolproof process.
An Evolving ProcessOne of the common methods we used to use was to manually review the materials used from each truck on all the jobs completed for that day and then go get the materials needed from the warehouse to replenish each truck’s inventory. We attempted to come up with a mathematical model to be certain the warehouse had enough of the materials available — without keeping too much in stock — so the trucks could be replenished daily. The system worked fairly well, but there were times when we miscalculated and either ran out of what was needed or kept too much inventory sitting in the warehouse. The cost of that excess inventory was potential profits and it represented money that wasn’t working. Eventually, many items in the excess categories became obsolete and, consequently, worthless. An OK system, but not as cost-efficient as we needed.
To improve the process, we went to a call-in system, where technicians would call in with the parts and materials used after each job, improving the lead time on reordering parts from the supply house and fine-tuning our inventory-control system. When we switched to flat rate, part of the process was simplified and automated further because when the technicians reported which jobs were completed we knew that certain parts were automatically and consistently used. They would also report any additional parts and materials that were necessary.
It appeared that we had an efficient system: good lead times, positive inventory control and reduced paperwork. Certainly, it was a better system than having technicians roam through the warehouse at the end of the day freely selecting parts to replenish their truck for the next day.
System EfficiencyCan you believe some companies still have trucks with whatever inventory of parts and materials that the technician decides are needed? There is no need to tempt employees who can access parts and materials at their convenience into “borrowing” a few things for home or, worse, moonlighting.
Besides reducing the cost of inventory “shrinkage,” which is not insignificant these days, there are other elements of an ideal inventory-control system that can put money in your pocket. For example, every mile that one of your service trucks drives out of its way to get parts costs you the same amount per mile as it does going to a customer’s home—except you generate no revenue. You have no doubt heard me caution service business owners about the risk of technicians leaving the customer alone while they depart to get needed supplies: customers may change their mind about wanting the work done, they may second-guess your pricing by calling another shop, etc. More paperwork needs to be generated, with the accompanying potential for more errors, every time a technician is correcting what is, essentially, an inventory-control problem.
If your technicians are not with customers selling parts and services, you are not maximizing what your company could earn. Technicians, recognize it or not, are in the business of selling parts. If they don’t have the parts or are spending time doing something other than being in front of a customer, you are leaving money on the table. The way to get — and keep — them in front of customers is to automate as much as you can the activities that they used to do manually.
In almost every business the way to improve efficiency is to short-cut the traditional processes with a new flow of goods or information, or both, that works as well, or better, at getting the goods and services to the customer. A couple of examples that I have heard about include the “just-in-time” inventory system the car makers use in Detroit, where the parts arrive just hours before they are needed. Just what you need, when you need it. You don’t run out of inventory and you never have to invest in any. Can you imagine how much money that saves?
Another example is Wal-Mart’s system. When a pair of jeans is sold in a store in Arkansas, the computer tells the supplier in San Francisco. So the jeans to replace the pair sold are already loaded on a truck by the end of the day. Apply that to thousands of parts and look at the savings!
Today, people go to college to study materials handling. It has become a science. It’s time that those kinds of efficiencies are available in the service-and-repair business.
What Smart Trucks DoThose efficiencies are here — if you are using Smart Trucks. Here’s how they work. You have probably seen the bar codes attached to food containers you buy in the supermarket as the checker scans them. All you hear is a beep and the item is added to your total bill. The checkout person usually doesn’t have to enter any numbers, except for a few items that may not have a bar code for the scanner. No more data-entry errors. Can you estimate what the savings are to the supermarket by eliminating virtually all of the entry errors that the checkout people would make? It must be significant.
The same type of system is used on the Smart Trucks. As materials are taken out of the truck by the technician, the scanner installed in the truck identifies the bar-coded items and (here’s the good part) sends a message to one of the major supply houses that your company needs the part replenished. Computer programs do the work of your inventory control people, interface with the supply house, plus, they do the accounting. It is a hands-off system.
The traditional “middlemen,” your parts and inventory people, are circumvented with an accurate, automated system that is easy to use and foolproof. More accuracy means lower costs and better inventory control. No shrinkage problems and no out-of-stock delays.
Where do you put this system? We are using the Super Truck that we have modified over the last few years — the one that was introduced to the industry by innovator and leading industry expert, George Brasil. It is a large, custom box truck designed to be efficient for the technician to both identify and access parts quickly. And it carries sufficient inventory for most jobs.
We have added some nice features, including a workbench and an inverter. Think of it, having 110 volts available in the truck to operate equipment. In addition, we added a ramp to make it easier for technicians to load and unload any machines, parts or anything heavy. We have improved safety and provided ways to save the technician’s time. These conveniences for the technician allow him to spend a minimal amount of time away from the customer and revenue-producing activities. If we can prevent one injury a year on one truck, the ramps pay for themselves. Keeping technicians happy and reducing our costs at the same time are just a few of the benefits of the Smart Truck.
The Future Is NowOften you hear about technological advances that are coming, or only those that large companies enjoy because they are only cost-effective on a large scale. Not so with the Smart Truck. They are here now, in use as you read about them. I was so impressed with the efficiency potential from these trucks that I had our team set up Maio Distributing so the Smart Trucks can be made available to companies that recognize a competitive edge. (Contact me for more information.)
Many companies in the service-and-repair business are feeling competitive pressure today from other companies in their community. This constant reminder of the need to compete sometimes encourages managers and owners to limit capital spending or to “freeze” changes in their operation, while they get the competitive situation under control.
Bad news. The competitive situation is not going to go away by waiting it out or hoping for the best. Today, leading companies in the service business need to maintain top-quality service using innovations that pay for themselves. At the same time, those market leaders need to recognize the potential for efficiency and cost-reduction every time it is available. It is difficult to continue to give great service if margins are shrinking.
So instead of holding back when an opportunity exists for you to provide your technicians with a way to spend more time in front of customers, jump at the chance. Smart Trucks allow your technicians to sell more parts and materials, because they rarely will face an out-of-stock situation. Plus, the trucks cut your inventory-control costs at the same time. And you save on the number of people needed to operate a warehouse.
The reality of the situation is that, in coming years, companies that don’t upgrade to the most cost-effective methods of running a business will no longer be able to effectively compete. Business growth will be limited. You’ll find those businesses competing with other small shops on a low-margin basis. Proven technological innovations, like the Smart Truck, will keep your business in the lead.