Did you ever notice that parts sometime move out of your warehouse on their own? I’m not here to accuse anyone, but I do want to share an inventory control system that I have found stops the problem. Nothing sophisticated, such as computer models or coding or the like, just a straightforward method to keep track of inventory so it doesn’t keep getting smaller.

Using such a system also brings with it another benefit: You and your techs and warehouse personnel can find things quickly and easily. Not being able to find parts and materials when you need them is frustrating and time-consuming, which means the lack of a system costs you money. Besides you never know when you are running low on parts, until you run out. It would be nice to be able to know what you need at a glance.

The dilemma many service and repair businesses have is that they need ready access to parts, materials and equipment; at the same time, they need to secure the areas where tens or hundreds of thousands of dollars of equipment is stored. How can you keep security tight and allow rapid access by techs who need parts for repair jobs? The solution we used was locked gates — and we’re still able to hand out parts to techs in a timely fashion. We use tight security measures as the first part of our inventory control system. No one is authorized unlimited access to the warehouse. Parts are handed out as needed by a solitary warehouse supervisor. But there’s more to it than that. Let’s look at what it takes to construct a complete inventory control system. Then I’ll explain how ours works.

Ideal Elements: If we were to design an ideal system, I would want it to have several features. An effective inventory control system would

  • be easy to learn;
  • make it simple to find exactly where the parts I needed were stored;
  • tell me what quantities of each part should be on hand;
  • be economical to set up and maintain;
  • use a consistent parts numbering system; and
  • assist in storing parts on trucks.

There are probably some other characteristics you may choose to add to a top-notch inventory system. But if we can put together a system that accomplishes all of the above goals, it’ll be an effective system. I’ll review each requirement individually, until our system is complete.

Easy To Use: Here’s an exercise to test your ability to understand our inventory control system: Hold up your left hand. Good, you passed. If you can tell your left from your right, you can understand how the system works. Some items are on the left side of a row and some are on the right side. How do you know one from the other? The parts stored on the right side have a part identification number beginning with “R” and, similarly, parts stored on the left side of a row have a part identification number beginning with “L.” Pretty easy so far.

Locating Parts: The next exercise helps us to determine both the difficulty of the system and confirms we can find the location of the parts we are looking for. Get ready. OK, count to 50. That was easy, too. Why do we need numbers? After the “R” or “L” in a part identification, the numbers reveal the location of the part, by box and position. For example, a part labeled “L0604” would be found on the left side in box No. 6 and position No 4. Using these combinations of letters and numbers, anyone can find parts. Shelf locations can be standardized, too.

Big Labels: On the front of every box of parts should be a large label. This label should display a picture of the part and a description of the part, such as “1/2-inch copper elbow,” or “36-inch thermocouple.” Naturally, the part number should be on the label, too. You can use your computer to make these labels or have them printed for you.

Proper Quantities: If you include the quantity of the parts that should be maintained in each box on your label, even unskilled personnel can take a quick inventory and note when it is time to reorder parts.

This simple but effective part numbering/labeling system gives us some of the ingredients we need for a reliable inventory control system. Our system is not only easy to learn and to use, but it’s economical and uses consistent part numbers.

We use the same part numbering system with our trucks. As a result, part numbers are standardized, and parts are just as easy to find in the trucks as in the warehouse. Techs can take a quick inventory of the parts they need in their trucks at any time. They know when they are running low and can get additional stock before they run out.

Other Parts: Once you understand the concept of our system, there are a few details I’d like to share that can also enhance the inventory control system in your company. Let’s look more closely at the physical equipment and policies I use that you may want to consider:

Racks: Unless you’re a carpenter, you shouldn’t be assembling wooden shelves. Switch to metal, and make sure they can hold the weight of your parts. Specifically, you’ll find that adjustable, steel shelves, no more than 9 feet high will serve you the best. The racks against walls should be no deeper than 12 inches, those free-standing can be up to 24 inches deep. Secure racks to adjoining walls. Attach free-standing racks to the floor. Keep an aisle between the shelves of at least 42 inches. On the racks, you can use cardboard or plastic boxes for small parts. Get large boxes for items, such as motors, faucets and large valves. Put overstock on the top shelves so common items are easy to get at. If you keep step stools handy, employees won’t be tempted to climb the shelves risking injury.

Polices And Procedures: Two fundamental policies govern the system I use: Lock it up and trace it. I’ll explain what I mean.

Would you take all of the financial equity you had in your business, convert it to cash and then leave it lying around your warehouse? If you don’t restrict access to your warehouse that’s exactly what you’re doing. Your warehouse should look like Ft. Knox. Only authorized people — not field techs — should be allowed to roam through the warehouse.

You should be able to trace all parts to a job, or the parts should be returned to the warehouse. Only issue parts that techs need for scheduled jobs. Replace parts for a tech’s truck inventory used on service and repair jobs. No other parts should be disturbed.

If techs run low on common parts either increase the number carried on all trucks or inventory a truck checking for shortages. All techs should carry the same inventory of common parts. Don’t be tempted to permit techs to carry whatever parts they want. You’re the boss. Standardization is the key to maintaining control over your parts. And it makes it easier to check inventory on any truck at any time.

Obsolete Stuff: As valuable as you think that overstock and obsolete inventory may be someday, right now it’s useless. Get rid of it. The longer you keep it around the less it will be worth. Getting half or a quarter of its cost will put you ahead.

Here are a few suggestions:

  • See if a supply house will buy it back at a reduced price.
  • Contact your trade association to see if they have a system to contact other contractors who can use your obsolete inventory or overstock.
  • Advertise in a trade magazine. Someone out there may be able to use what you have. Maybe even run a special with customers to unload the overstock. Either way get the parts and materials you don’t use out of your warehouse and out of your way.

Reducing shrinkage, keeping only the inventory you need for most jobs and being able to quickly locate parts and materials are good reasons to set up an effective inventory control system. If you have moving parts, it’s time to tie them down.