6 Strategies for Improving Inventory Management for Your Fleet
In the crane and rigging industry, inventory management can be the equivalent of a sustained migraine headache to your service or purchasing managers. If you do not have a reliable and organized system to track thousands of parts from a myriad of different manufacturers, you inevitably will have assets that are unaccounted for that will cut into your profits.
Conversely, your inventory can be a well-oiled (pun intended) machine. When fleet management software is utilized to manage your parts inventory, organization, real-time visibility of parts on hand and cost saving opportunities keep your service department running efficiently.
Below are six strategies I have seen implemented that work to improve inventory management for fleets of all sizes:
1. Decide on a Physical Organizational Structure
- Logical and intuitive frameworks are best
- Begin with major manufacturers like Grove, Manitowoc, Liebherr etc.
- Categorize those manufacturers into sub-groups such as electrical, hydraulic, pneumatic, hardware etc.
- Maintain an alpha-numeric order for all parts and clearly label bin locations
- Secure inventory to reduce confusion regarding lost or misplaced items
2. Develop a Company-Wide Parts Entry Procedure
- Follow the recommended procedure by your fleet management system so that there is uniformity with all of your parts records
- Part number, description, manufacturer, unit of measure (UOM), part type, vendor, quantity on hand and barcode information should always be entered to avoid confusion regarding details of a specific part
- Consistency in part entry is especially important for companies with multiple locations. “Part #102” in “Yard A” looks identical in your system as “Part #102” in “Yard B”. Having a 1 to 1 entry allows you to easily view and utilize inventory from all companies and all yards in real-time
3. Determine Valid Reorder Points to Manage Quantities On Hand and Reduce Cost
- Establish minimum and maximum barriers to the parts records of routinely used items to avoid overstocking or running out of something essential
- Track quantity on hand through management software
- Utilize the reorder report in your system to automate processes when possible
4. Track All Expenditures in Your Fleet Management Software System
- Justify purchases as follows:
- Sale to a customer
- Ordered for a service activity tied to an open work order or job (linked to a purchase order)
- Purchased for inventory as reorder point is reached
- Develop usage information unique to your fleet and your needs to aid in reducing your service department’s operating costs
5. Closely Monitor Consumables
- Ensure stock on hand for items like grease, aerosols, cleaners, safety materials and other items that are used across multiple units and service activities
- Manage these items efficiently as there is no reasonable means to attach, for example, a quantity of aerosol to a work order, however, their cumulative costs will add up, especially for larger companies
- Set an example to the service staff that ALL items no matter size or price will be monitored and accounted for
6. Encourage Procedural Refinement and New Ideas
- Maintain a healthy dialogue between management and staff to determine what practices are working and what are not, as well as ways to improve organization
- Evaluate costs by researching new vendors or inquiring about further discounts
- Determine the true necessity of items and quantities being ordered
Inventory management is difficult – but it doesn’t have to be. Fleet management software and consultants can help. For more insight on how you can manage your company’s inventory more efficiently contact our team today.