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    Introduction to Construction Inventory Management


Introduction to Construction Inventory Management

Although construction happens on the job site, the operations of a modern construction company go far beyond the field. Every project completed by the field personnel is supported by back office and warehouse teams. Only when all three teams work together can a project be successful and profitable for the company. 

The management of construction inventory – tools, equipment, materials and consumables – is one element of construction companies’ operations that involve all three teams, field, warehouse, and back office. The field team needs items on site to complete the job, the warehouse team is responsible for delivering those items when needed and in good working order, and the back office team needs visibility and oversight to ensure the project progress on schedule and within budget. 

This high degree of coordination among teams means modern construction companies need to properly manage their warehouse stock, transfer items to and from the field, inspect and service items when necessary, purchase and receive items when stock runs low, and more. These companies need a construction inventory management system.

The problem with generic inventory management systems

The problem with most inventory systems is that they just provide counts of what’s on the shelf. For construction companies, that is not enough. Margins on contracts in the construction industry are often thin, so to make a profit, construction companies must operate efficiently. And to operate efficiently, they need a system that supports end-to-end logistics and operations workflows for sourcing, transferring, tracking, servicing, and replenishing their inventory items. 

For example, knowing that there are two generators available at the northwest warehouse is helpful information, but what if the upcoming job requires 5 generators, and one of the two in stock is required at another location? Most generic inventory management systems won't be able to relay that information without a lot of input from workers. This also significantly increases the possibility that human error will come into play and potentially cause a crippling delay due to a lack  of proper equipment on site. 

Why efficient inventory management is crucial for construction companies

Construction inventory management is a much broader, more strategic concept than just keeping track of what’s on shelves in the warehouse. It provides the opportunity to think strategically about how you resource projects and manage the process and the assets deployed throughout the process.

Modern construction companies have the opportunity to manage their warehouse, purchasing and receiving, in a seamless fashion to ensure waste and lost productivity are eliminated. They can minimize the costs associated with these functions by deploying the appropriate systems to allow their personnel to improve timeliness and accuracy of their warehouse and field operations, from identifying a need for an items, picking and transferring it, or purchasing and receiving the item if it’s not in stock – all through a system that tracks and keeps record of assets throughout their entire life cycles.

How construction inventory management systems differ from other inventory management systems

The biggest difference between a construction inventory management system and a generic inventory system is that a construction inventory management system is designed to support different types of construction assets (which have different requirements) and operational workflows specific to construction. Let’s take a look at what's unique about construction assets and workflows. 

There are four types of construction assets – tools, equipment, materials, and consumables – with different tracking and management requirements. For example some items should be tracked in bulk (eg hammers) while others need to be tracked individually (eg generators) based on value, service needs, or other factors. Additionally, some items get used up on the job site (eg plywood) while other things need to be returned to the warehouse once the job is complete (eg cherry picker). A robust construction inventory management system will support both bulk and individual items, as well as the ability to track usage history and service information when needed.

In addition to supporting construction assets, an inventory management system for construction should also support key logistics and operational workflows, including the ability to request and fulfill item transfers between stocking locations and job sites, purchase and receive items through purchase orders automation, track and schedule servicing of equipment such as inspections and maintenance, and automate job cost and billing based on tracking item usage on a per project basis. 

What else to look for when selecting a construction inventory management system

In addition to support for construction assets and workflows, construction inventory management systems should integrate seamlessly with your other business systems and provide powerful analytics reporting to ensure the system meets the needs of every department and can grow with your company. 

Integrations. As a critical operational system, your construction inventory management system should be integrated with your other business systems to ensure data from the system is available enterprise wide, avoid double entry, and reduce human error. Some specific system integrations to consider are connectivity with your ERP or accounting system, your construction management software, and broad support for various scanning technologies such as barcode, RFID, QR code, GPS, and/or BLE. 

Reporting and Analytics.  In addition to supporting more efficient operations, you need the ability to measure results, report on them, and identify other areas for improvement. Robust reporting and data-driven analytics are no longer optional, they’re must-haves for construction companies that are going to remain competitive and profitable.

Integrations and analytics reporting deliver strategic value to meet the needs of your organization today and in the future.

Improve your Construction Operations 

Underutilized inventory is expensive, a nuisance to store, and bad for your balance sheet. Don pay for warehouses and shelves you’re not utilizing. Leverage an inventory management system designed for construction companies with interconnected digital workflows that reflect and support your logistics comprehensively. The result will be more effective and efficient operations that save your personnel time and save your company money.

A robust construction inventory management system will enable you to keep the warehouse organized and support efficient warehouse logistics, provide tracking of assets from warehouse to job site and back, deliver exceptional service to active projects, and give your back office team the visibility, oversight, and systems integrations they need to understand what’s happening in the field and run the back office business functions. 

To learn how ToolWatch supports construction inventory management and warehouse operations, visit today!

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