John Baethke, president of John Baethke & Son Plumbing in Chicago, loves technology but doesn’t see automating his inventory management system on his fleet of service trucks anytime soon.
“At five trucks, I doubt it,” he says. “I actually have been intrigued by what other plumbing contractors do with their bar-code scanners. I looked into it and didn’t see it as any better than what we are doing. I am a big fan of technology, but I haven’t seen the technology that can do what we’re doing any better than we are.”
Baethke’s paper-based inventory management system results in his trucks leaving his shop every morning with an identical load of plumbing products, hand and power tools, and diagnostic equipment most frequently used on a service call. A binder in each truck lists every item, and all the binders are the same.
“We’ve had discussions over the years, but time really has decided what goes on the truck,” says service plumber Steven Halbert, who marks his 10th year with the company this month. “John has really thought this thing out completely. Every morning I am given a truck that’s fully stocked. It’s set up that way from the get-go.”
As for technology, it’s a different story when it comes to GPS. Each service truck is equipped with a system that allows Baethke to track his fleet from his computer or smartphone. Each of his service plumbers uses a GPS app on his smartphone to find his way around the company’s service territory, which covers a seven-mile radius on Chicago’s Northwest side.
“Those are two different GPS systems,” Halbert says. “There’s John’s aspect as far as knowing where I am. As for me, what I need to know is where I am going. My iPhone gives me better directions than a device I plug into a cigarette lighter.”
Baethke started his own company 20 years ago. Technically speaking, he’s the “son” in John Baethke & Son since he took the company name from his father’s handyman business.
As a plumbing apprentice, Baethke mostly did new construction and remodeling on custom homes. He envisioned staying in that line of work in his own plumbing business, but he and a former business partner soon migrated to the service side.
“I discovered very quickly the headaches of working with general contractors,” Baethke says. “They were typically too demanding and expected you to sharpen your pencil on every job. You could never be cheap enough or be cutting enough corners.
“Many plumbers go the other way. They don’t like the headaches of working with homeowners who they say can be a pain in the neck on service calls. But I found in the service business that homeowners appreciate that we do a fine job and get it done right.”
Today, 95% of Baethke’s business is residential plumbing service with 5% commercial. For seven years, the company also did HVAC but it was a constant challenge to find qualified service techs, Baethke says. Baethke sold his HVAC operation to another contractor four years ago.
That same year, Baethke’s company generated $1.6 million in revenue. The annual income has grown incrementally every year since to $1.8 million in 2013.
John Baethke & Son employs 10 people. It maintains one warehouse truck along with the five service vehicles, which are kept in a garage at night — either at Baethke’s shop or space he rents from a retired roofing contractor in the same block.
Despite Chicago’s harsh winters, the garage space and small service territory have added longevity to Baethke’s vehicles.
“We’re not putting any more than 5,000 to 6,000 miles on the trucks a year, which can be a benefit and a negative,” he says. “I have trucks that look good, operate well and have very low miles, but that also means I have 10-year-old trucks with only 60,000 miles on them.”
The consistency of the vehicles helps Baethke implement his inventory management system, which, he admits, has no flexibility in it.
“If one of my plumbers takes material off the truck, he has to fill out a ‘short’ sheet, which he turns in every evening, and that stock is returned to him the next morning,” Baethke says. “So, every day he has a fully stocked truck, which is another benefit of the trucks being housed here. Let’s say a plumber drives his truck home at night. Then he might not come into the shop but once or twice a week. So, a lot of times he would be running his truck without stock, which results in more stops at the supply house.”
The short sheet lists the parts the plumber is short of once he takes items off his truck. At the end of his day, he turns in this form to warehouse manager Bill Pope, who keeps 95% of the inventory needed to replenish the trucks in the company’s onsite warehouse. Pope orders products and parts over the phone from seven or eight local supply houses and online from Hodes Co. in Kansas City, Mo. Locally, he says he will source material based on the supply house’s service, product quality and price, in that order.
Every morning, Pope puts the needed parts in plastic bins whose number corresponds with a number on the service vehicle and places the bins by the trucks. He will put larger items, such as a Gerber or TOTO toilet, directly on the truck. The plumbers stock the rest of the parts from the bins.
“I used to stock all the parts on the trucks, but with the number of trucks and amount of material, it got to be a little much,” Pope says.
For plumbing products, every truck carries three types of kitchen faucets, three kinds of toilets, three kinds of lav faucets, two different garbage disposals as well as sewage ejector and sump pumps. Pipe primarily used in residential applications is stocked in sizes from 1/2 in. to 2 in. in either PVC, copper or cast-iron. Smaller items include p-traps, pump covers, emergency shut-off valves and pipe fittings.
Tools used on service jobs include pipe wrenches, power tools, fiber-optic cameras, monitors and drain-line maintenance equipment, primarily from RIDGID. Halbert also mentions his Sawzall from Milwaukee Tool, which he says “is like my right arm.” Other tools include pipe snappers for doing cast-iron work, torches with a backup torch, pipe cutters, and diagnostic equipment such as combustible gas leak detectors, manometers, volt meters and amp probes.
Implementing the inventory management system takes more discipline on the part of the service plumber than it does training, Halbert says.
“The discipline is when I take something off the truck I have to write it down. That’s tough to do because sometimes I need options on what to use during a service call,” he says. “But by and large, when I’m done with a job, I do an inventory right there of what I used and write it down so it’s fresh. Stuff I know I’m going to use, I’ll write it down on my short sheet before I even install it.
“The form already should be filled out by the time I get back to the shop. If you get caught filling out your short sheet at the end of the day, you’re relying on your memory.”
Although Baethke developed his own inventory management system, he adds that he hasn’t done anything in the company that he hasn’t learned from somebody else. He stays active in the plumbing industry as a member of the boards of directors of the Illinois Plumbing-Heating-Cooling Contractors, the Plumbing Council of Chicagoland, and the Plumbing Contractors Association of Chicago and Cook County.
He equipped his trucks with GPS eight years ago and found his current vendor — Fleetmatics — in an online chat room of the Service Roundtable.
“I asked other members, ‘What are you using and what are the positives and negatives when it comes to GPS for your trucks?’ And people just gave me amazing information,” Baethke says. “With the information from my fellow contractors, Fleetmatics seemed top-notch and they’ve given me amazing service.”
While he doesn’t like to use the term “big brother,” Baethke says GPS has given him a comfort level just knowing his trucks are where they’re supposed to be. He can access Fleetmatics’ website to track his trucks from his computer or from his phone’s mobile app, which he added two years ago.
The app allows him to do everything he can from his computer except some management functions such as adding or removing trucks or setting parameters for alerts. Baethke receives an alert when a truck is being used after hours or is exceeding the speed limit.
GPS has helped his company improve its dispatching and its customer service, he says.
“Rather than call the service plumber, the customer can call the office and ask, ‘Where’s my fella?’ We can look it up on Fleetmatics’ website and say, ‘He’s three-quarters of a mile away and should be there in about 10 minutes,’” Baethke explains.
And while Halbert says it is the service plumber’s responsibility to find his way to a job, Baethke can follow a truck’s drive path. When necessary, Baethke shares with the plumber a more efficient way to get to a job, which increases the company’s productivity.
For the most part, though, the GPS on the plumbers’ smartphones has proven to be a cost-efficient replacement for a device in the trucks that would give turn-by-turn directions to a service call. Baethke initially had desired this feature in his GPS system but now says the smartphone technology has made it unnecessary.
Baethke says he will continue to make decisions on how best to integrate technology into his service business.
“Getting away from the trucks, we have to be careful about how much technology we use when we make a presentation to the customer,” he says. “Yes, customers want companies that are professional and on the cutting edge. But when you start pulling out laptops and other devices, it can get in the way of talking with the customer, writing something out and the understanding that builds a relationship with the customer.
“I am very pro technology, but I know there’s a limit, and we can’t go past that point.”