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Saturday, 28 February 2009 19:00

Managing Inventory - 5 Easy Steps That Can Help You Save Money During This Recession

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Next to labor, inventory is one of the biggest expenses that building service contractors pay. While BSCs are operating at lower-than-ever profit margins, many of them are biting even further into their profits because of poor management of inventory.

With inventory costs up to 10 percent of a contract amount, BSCs cannot afford to mismanage their inventory.

1. Throw away unnecessary cleaning products and materials.

How many chemicals do you have in your janitor closets? John Walker, president of ManageMen, Inc. in Salt Lake City, UT has trained thousands of cleaning personnel and management through his very successful Janitor’s University.

“Most people use or store 20 percent to 50 percent more cleaning chemicals and materials than they need,” Walker explains. “The two biggest mistakes BSCs make is that they are never out of a product they don’t use, and they never run out of a product they don’t need.” Throw them away!

2. Use one product for each type of cleaning. How many janitors does it take to screw in a light bulb?

Well, how many cleaning products do you need to clean something? Usually one product can do the job for each type of cleaning. Sometimes one product can even be used for multiple types of cleaning. Simplify your inventory.

3. Only put inventory where you distribute it.

What does five minutes mean to you? In the cleaning business it means a lot! It is about how long it takes to go from the second floor to the first floor to get back to the janitor’s closet to retrieve a cleaning product or find the toilet paper. If you have 100 employees doing this every night just once, that adds up to around $20,000 in labor costs per year due to mismanagement of inventory!

Put your inventory close to where your people need it so they are not wasting time going to get it. With ManageMen’s (OS1) cleaning process, a worker gets a distribution tray full of everything to clean so that no time is wasted.

4. Track inventory use.

Tracking inventory is not only for knowing when to reorder and determining costs, but also for tracking employee performance. One of the buildings we cleaned was three floors with six restrooms. We tracked the PortionPac chemical usage of each employee each night. Our restroom specialist came back without using any disinfectant a couple nights in a row. Because we tracked inventory use, we were able to identify a problem and found out that unauthorized chemicals were being brought into the building by this employee with no Material Safety Data Sheets (MSDS). We were able to quickly resolve the problem and get back on track using the right chemicals in the restrooms.

In addition, because we tracked inventory use, we were able to show the client that we used 108 gallons of ready-to-use disinfectant in their restrooms each month. Tracking inventory helps you know what your people are doing, and if they are using the right stuff.

5. Use software to automate inventory processes. The right software can assist you in managing your inventory, saving you both time and money. Certain online tracking software that manages customer service and quality also manages inventory. Depending on the software, you can scan inventory as it arrives, scan it out as it is used, have automatic e-mail notifications of when to order products, and be able to track inventory usage and costs through easy graphs and analysis. You will always have the products you need and not too much of them.

Consumables

Even though BSCs may not want to hassle with being the middle man to provide consumable products to their clients (i.e. toilet paper), most BSCs find themselves in a position of having to do so. Here are some very important things to remember so that you don’t lose clients over managing client consumable inventory:

• Never include the price of consumables in the price of your contract amount. Always make it a cost-plus markup (i.e. cost plus 10 percent).

• Always keep the customer in mind by getting the best deal possible for them (use your bulk buying power).

• Don’t offer several different types of the same product, and don’t offer the lowest quality/cheapest. Paul Condie, Director of Operations for KBM in San Diego, CA, suggests, “Don’t defray your buying power by offering more than you should. Offer two lines of the same product—a standard and a premium.”

• Purchase environmentally sound consumable products as much as possible.

Managing and maintaining inventory effectively is one more thing you can do to be more competitive and thrive during this recession. Take inventory now of what you need to do to better manage and maintain your inventory. During this recession, those companies that manage and maintain inventory effectively will beat out those companies that do not.
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Michael Jenkins, President, CleanTelligent Software

Michael Jenkins is president of CleanTelligent Software, a software company trusted to help build and preserve relationships. With over 30 years of experience, Jenkins is internationally known as an educator and consultant in the software and service industry. He is a noted subject matter expert on quality, revenue, retention, and productivity. Visit www.CleanTelligent.com or (877) 272-4648.

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