Even More Pain – Inventory

When business owners discuss the top issues in managing alarm companies, parts inventory is of significant concern.  Finding, training and retaining a good work force follows right along.  If this does not describe you, consider yourself lucky.

Today, you may be able to visually review the inventory sitting on a shelf in your office.  Without an inventory management system, you "know" what parts you need to order for upcoming jobs.  As long as you remain a small business, inventory is no problem.  However, according to Forbes, if you're not growing, then you're dying.  When, you remain in the alarm industry long enough, sooner or later "just knowing" will not be adequate to manage a successful company."  The health of your enterprise requires willingness to make necessary changes and innovate to meet competitive challenges.  With any worthwhile change, with positive growth there is always a factor of pain.  Expect it.  Understand this pain is normal and you will be okay, if you rise to meet changing conditions.

Why is inventory such a problem to control?  Typically, the answer is lack of time, lack of timely information, a disjointed system or likely all of the above.  Pulling all the details together can be quite cumbersome.  Paper trails with various purchase orders, customer work orders, RMA’s and vendor invoices have to all be brought together without error.  This is necessary to verify how much should be on the shelf for each item.  Not knowing for sure can be very costly.  The missing camera that was received and paid for, may be found at the local flea market or on someone’s side job.  We have all heard the horror stories.  Hopefully, you have only experienced the pain vicariously.

Simply put, jobs cannot be scheduled with absolute certainty without all the goods ready to be installed.  The embarrassment to not performing the project as planned because of unavailable parts is more than costly on the income statement.  The loss of goodwill, reputation and referrals cannot be measured.  These things can happen just because inventory is out of hand.

Then the opposite is also true.  Rather than not having enough, the inventory can be too large.  The cost of broken devices and holding obsolete equipment is wasted resources.  The critical part for a new system that is "dead on arrival" at the site, may no longer be under vendor warranty.  That means you get to pay twice, just like the property owner who fails to get lien waivers.

Further embarrassment could arise from installing unused but old parts for security or entertainment systems.  Your competitor furnishes a new system next door to your customer.  Then the neighbors begin comparing the functionality of their systems.  When your customer finds out that his or her equipment isn’t the latest and greatest, they may not be so excited that you saved them a few bucks with cheaper, older devices "that work".  When someone finds out that a neighbor has something better and they were not offered a choice, the emotional feelings of being ripped off rise rapidly.  You did, however, get rid of your old dusty stock.

Then comes the straightforward, age old, sink the ship type of reality.  If your money is tied up in inventory, you may not have funds to pay current invoices or have ready capital to expand your business.  Adding a new employee or purchasing a new van may be just what floats a bigger boat for you in the sea of competition.  When money is encumbered on the shelf and not in the bank, it becomes more difficult to do new things.  Unfortunately, the avenue of business is littered with wreckage of those who went belly up because inventory was not controlled and expenses could not be paid.

That would be all except for the tie in of inventory and retaining a good work force.  Your company can only be better when your field crews are better than your competitors crews.  Money tied up in inventory cannot be used for pay raises.  The inefficiently of inaccurate inventory will translate to frustrations on the job for your valued associates.  Prolonged irritation with jobs not progressing smoothly will make the grass look greener for them elsewhere.  Finding and training replacements comes with a significant cost.  The cost of your time, reputation and lack of efficiency in serving customers can only be estimated.  You will certainly feel it.

Alarm Management Software is ready to assist you in managing your inventory costs.  We integrate purchasing, job management, and accounts payable with a unified approach.  With AMS Pro you know what needs to be on the shelf and where each part is on site.  Historical information provides a basis for efficiently determining the maximum amount of each part to carry.  Stay ahead of the game by allowing AMS Pro to determine quantities to purchase, as parts become committed to new jobs that haven’t yet been scheduled.  You control the parameters, so you control the inventory.  Partial shipments from vendors and returns are also a breeze.  You will know what vendor credits you are due and when they are received.

Do your critical thinking up front with our help in putting an inventory management system in place.  Then tweak it from time to time to fine tune as circumstances change.  You will be more relaxed with the confidence of knowing your AMS Pro system will make your company more profitable with fewer headaches.  We believe AMS Pro will pay for itself.

Don’t hesitate to contact us for more information.  The future is in your control.

Bob

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