September 25, 2023
How To Reduce Inventory Costs
"Bob, just look at this workshop. It's a mess, but you keep buying more stuff."
Do you have this problem in your home workshop? Are you wondering how to reduce inventory costs? Are you turning into a hoarder of tools and parts and supplies of which you use a fraction? Or do you buy something you may use once a year because it's a good deal? Maybe a good enough deal you buy two or three? I've seen hoarders. Believe me, it ain't pretty. So, let's get that inventory under control. Let's discuss various ways to reduce inventory costs and have better stock organization. Warning: This may be a time-consuming job, especially if you've let that stock build up. However, time spent today means dollars saved tomorrow.
1) Know what you have
"It's called what, Bob? A skyhook?"
I know the hoarders may have it all listed in their heads, but the rest of us don't. Take time and make a list of what you have along with some description details including specs and how many come in a package. Did you really need a case of Part X when you used only two?
2) How many do you have
"Why did you buy three skyhooks, Bob? Your workshop isn't that spacious."
While you're making your list, put down quantities. You may find you purchased another Part X because you thought you were out. Knowing the number helps you save money on the next shopping foray and avoids excess inventory.
3) Where is it
One of the reasons you purchased more was because you didn't know where you put the last item after you returned home. Stuck it in a drawer or cabinet and forgot about it? It happens. I'll admit to doing this on occasion. Part of organizing the workshop is knowing where everything is located.
4) The cost of each – of course!
"You paid how much for the skyhooks, Bob?"
Yes, this is an obvious point, but add up the costs. Knowing may be the proverbial smack upside the temple, but it is important to budget. You'll be more aware of the too-good-to-pass-up deals and decide you really don't need Part X.
5) Where you bought it
The point here is to shop around. If the part is needed and you make regular purchases, could you find a place that offers a better deal?
Another aspect of this is when your listing vendors, do you find the same store comes up a lot? Or that one store has many of the parts you buy at different places? Could you get a deal by purchasing a lot of items from the same store?
6) What do you use it for
"Why do you need skyhooks, Bob?"
Often, I've looked at something and wondered what I used it for. Was it for a piece of equipment I disposed of months before? This usually occurs on items I don't use very often and segues into the next point.
7) The last time you used it
"You haven't even taken the skyhooks out of the package."
Even the "good deals" waste money if you don't use something but once or twice a year. This may seem a minor point, but knowing the last date used keeps you from buying more and may help you dispose of obsolete parts.
8) Is it critical to have or something you'll use every so often
Similar to the last point. Some items are important to have around either for preventive maintenance or emergencies. You have increased costs when you're out of Part X and it's needed immediately. Note these items and keep them in stock.
9) Substitute parts
"I know, Bob, there's just no substitute for a good skyhook."
Make a notation on your inventory list of which items could be swapped for another, you know, just in case you are short.
Having an alternate saves you time and money on a special purchase.
Being organized with these nine points, you should see a reduction in inventory costs. You'll have better management over what you have, how much you have, where you have it, and why you have it.
If you work in a company that has a sizable stockroom, do you see disorganization and out-of-control costs? Consider a computerized maintenance management system. Review the nine points and see how such a system helps solve them.
Descriptions and specs of inventory in one list.
Aisle>shelf>bin or cabinet>drawer. Keep a location record in the CMMS.
Track costs and purchases.
Record vendor information.
Assign inventory to specific assets and preventive maintenance jobs.
Run a report on the last time you used a part.
Designate parts as critical and assign substitute parts.
You may not do this at home, but a great way a CMMS helps out inventory costs (parts and tools that go missing or aren't brought back) is an issue/return policy. You could even set up authorizations on each end of the process.
Stuff around the house accumulates if you're not careful. Stockpiling is good for some things, but the majority of the time, it's not cost-efficient. For maintenance departments, a CMMS is the best 'tool' to manage inventory and stay organized.
For a full-featured CMMS, there's none better than MAPCON. Inventory management is one of the best benefits of this powerful, easy-to-use, and scalable system. Call 800-922-4336 for a free demonstration. Cut costs with MAPCON!