Managing service truck stock

Step two: Implementing a bonus program

• Once the inventory management is in place at each stock site, implementing a bonus program can help ensure employees adhere to it. To do this, the amounts set-up as ‘bonus’ need to be determined and weighed in relation to the cost/benefit analysis mentioned above, but it needs to be significant enough to get all staff to buy into the program. For instance, a service technician is not going to buy in for $50 if they are doing jobs on the side using company inventory. Perhaps, try giving two bonuses twice a year. For example, a company with one retail store and one warehouse employing four service technicians that offers a $250 bonus might give out a total of $6K per year. For a business that was previously writing off $50K to $150K in inventory losses each year, this bonus idea should be a no-brainer.
• Trucks should be cycle counted on a regular basis (e.g. monthly or quarterly) and bonuses can be applicable on two of these counts. As mentioned earlier, each employee would be eligible for two bonuses—the first paid on individual accuracy (depending on what is considered an acceptable level/loss). Keep in mind, inventory levels that are over are just as bad as being under. The bonus should be based strictly on accuracy within a certain percentage (e.g. within 98 per cent) inventory valuation.
• Each employee is eligible to get a second bonus as well, but the catch here is everyone must be above the threshold to receive it. This can be done in a quick huddle, paying the bonuses out in cash, whereby creating some fun and friendly tension. It could also work as a team building process as the peer pressure will be immense on the person who kept everyone from getting the second bonus.

Investing in inventory

With this program, not only is everyone invested in their own inventory, but also their colleague’s inventory. There is no more motivation for taking stuff off each other’s trucks or running into the store and just grabbing something off the shelf, because they are working as a team to ensure inventory accuracy as a whole. Staff members will also start to help one another perform inventory checks, and double-check parts on service orders. Once the service truck inventory plan is in place, and employees understand how it works, it should only take two cycles to get things on track.

Having accurate, real-time inventory is one of the most powerful and profitable metrics for any business. For instance, inventory turns can be increased to ensure product stock is at optimum levels, while also targeting inventory dollars to the departments and product types with the highest gross margins, which can increase profitability.

Over the long-term, inventory history can accurately report gross margin and turn data for past years, resulting in better buying decisions. Most importantly, by implementing a comprehensive inventory plan that includes service trucks, companies are able to lower their overall inventory. In addition, business software puts real-time information at the fingertips of decision-makers, making it easier to reduce inventory carrying costs, which is essential to remaining competitive in today’s marketplace. Once there is buy in, everyone on staff can access and trust the inventory listed, allowing retailers to better service, control costs, and make smarter purchasing decisions.

Implementing a solid inventory management system using an integrated business software program will not only help to save money, but also allow managers to implement new marketing campaigns, make smarter purchasing decisions, or change the course of business if there is a shift in operations or fluctuation
in industry trends.

There is nothing worse than sitting on $100K of inventory that is not needed and should have never been ordered. With this in mind, it is never too late to plan an inventory control system that drills down to the service and/or delivery truck level and reap the many benefits it can offer.

Author’s note: This article was adapted from a blog post by Dan Bradford, a former sales manager with Evosus for more than 10 years.

Jessica Chase is the vice-president of client services at Evosus Inc., in Vancouver, Wash., a developer of business management software designed specifically for the pool and spa industry. She has been with the company for more than eight years and previously held the position of support manager. Chase has a bachelor of science in social sciences from Portland State University. She can be reached via e-mail at jchase@evosus.com.