Even moving to a decidedly less glamourous, but just as critical and transformative ERP solution, can be hamstrung by poorly set up inventory.
Product inventory in the home construction industry can be as yet unpurchased and still in third-party warehouses, stocked in your own warehouses, on-site, or on the back of a truck. Depending on your business model, your inventory is in effect a shopping list of in-stock and available-to-order products for customers keen to customise their home.
Regardless of your inventory model, it’s essential above all that its well set up in your operations system. If not, then the bells and whistles technology that enhances and accelerates your sales and business processes will remain out of reach.
What does good (and bad) product inventory look like?
Let’s start with the negative. Poor inventory management can cost you dearly in errors, effort, efficiency – and income. The tell-tale signs that you need to review your inventory set up include:
- Financial losses. Signing off incorrect or unavailable products on a contract, and having to honour the cost of sourcing the product elsewhere, or replacing with one of equivalent resale value (but perhaps a different margin).
- Poor customer experience. Having to revisit a quote or contract to discuss and agree on replacement products when the chosen inventory items turn out to be obsolete or unavailable.
- Inefficiency. Reworking and reissuing quotes and timelines based on changing products and availability (which is especially important given the current supply chain delays).
- Poor processes. A failure to update products due to inefficient internal processes. A supplier may advise price, availability, or specification changes, but unless this is shared with the correct people, it may not be reflected in your inventory.
- Slow response times. The inability to generate on-the-spot quotes due to uncertain inventory.
So, what does good inventory look like? It starts with modern software and an in-depth understanding of what constitutes good inventory processes. At a minimum, your product inventory solution needs to:
- Be easy to use. Software which has a complex user interface drives down adoption. While it may have complex automated workflows in the background, the solution should be intuitive to use and require minimal training.
- Support your inventory processes. Your solution needs to allow you to apply clearly defined processes and controls, so the right people have the access they need to do their job. For example, to add, update, remove, red flag and deactivate products.
- Capture all the product detail needed for your business. If it’s relevant, you need to be able to capture it. Product attributes including resale and wholesale price, SKU, stock levels, where it belongs in the house, real-time or backorder availability, and more. Without this data, you can’t adopt on-the-spot technologies that generate real-time quotes.
The case for sorting out your inventory
With 50-60% of total construction costs attributable to materials and equipment, a well-managed and accurate inventory can be a make or break factor for many home construction businesses.
As well as providing an onramp to more advanced business technologies that will help grow your business, a modern inventory management system should deliver excellent day-to-day ROI.
- Never over- or under-stock again. Cut costs by ordering in products in the right quantities at the right time.
- Reduce unproductive activities. Eliminate the loss of valuable time and effort required to look for missing items or track them manually.
- Save space. Well-managed stock leads to more efficient and organised warehouses.
- Have happier customers. With real-time inventory, you can set and meet customer expectations and offer options on the spot when product is unavailable, or long lead times will delay construction.
- Meet your contractual commitments. Transparency and accuracy of supply levels are crucial to ensuring your ability to deliver a project on time, and within budget. This involves understanding the right level of supplies to carry to avoid incurring huge carrying costs, setting re-ordering alerts to avoid running out of products, as well as keeping supplier lead times in check.
Future-proof your business
For those who have successfully addressed the state of their product inventory, the rewards are great.
They can generate live pricing, visualisers, and visual quotes (creating a 3D walkthrough model of the home complete with the customer’s choice of floor covering, fittings, and more, as well as a total cost) based on accurate inventory. And their ability to convert prospects to customers is not only higher than that of their competitors, but faster and more efficient.
They can also enjoy seamless, streamlined real-time integration between inventory and accounting, purchasing, ordering and more – all from one central platform. And even access live product updates in their inventory solution directly from suppliers’ own inventory software, on a mobile device.
Building a more competitive business often needs to start with getting the basics right. And while it’s the nuts-and-bolts part of your business, improving your product inventory is a sound foundation for growth in a highly competitive market.