Since the pandemic, there have been changes all around us and in every industry including construction, but one thing within the construction industry that companies now must track is inventory. Learning how to adapt your processes for these new changes can bring on challenges, and require some change in your process and tracking. However, constantly updating your processes is necessary in order to keep your business growing and we have to roll with the changes around us!
The first step in anything is acceptance. Purchasing and managing inventory is not what it once was. Prior to covid, many contractors and subcontractors were able to purchase materials as their project progressed. They would be able to obtain materials as they needed them and never had a problem doing so. However, right now that can be very hard to do. Certain materials are becoming scarce and many contractors and subcontractors are starting to stockpile materials as opposed to purchasing them as they go. The reasoning behind this is that you just don’t know what might be unavailable next week or next month and you don’t want to be held up in the middle of a job waiting for certain materials that are out of stock.
The second step is to figure out how you are going to manage it. How are you going to manage it from a cash standpoint and how are you going to manage it from a tracking standpoint? Updating contracts to collect more of a deposit upfront to be used for inventory is one way. This will allow you to buy in bulk when the opportunity arises because you have upfront money from contracts to do so. Now Tracking the cost of your finances is the next crucial piece. You need to account for the full amount when you purchase, but maybe you don’t want to expense it out until the material is actually pulled out of inventory and used on the job. Recognizing the large cost up front can skew your financial reports. Being diligent in your inventory stockpile tracking is crucial to the accuracy of your finances, inventory management if not done properly can cause inaccuracy in your reports.
If building up inventory wouldn’t work for your particular business or you would like to do more, you can consider creating a network of vendors. Most of us have specific vendors that we use and work with on our projects, but with shortages all around us it is not always possible to use the same vendor each time. The best thing to do is create a network of various vendors from various locations. This gives you the opportunity to find the supplies you need at a quicker rate, especially if you’re in the middle of completing a job. For example, you might be working on a roofing job and realize that you’re running low on one of your necessary supplies and your local supplier is not getting it restocked for a few weeks. No worries! You have built a relationship with other vendors outside of this area and one of them might be stocked up. Having these “back-up” vendors is a great way to save you time and frustration when a crisis pops up.
Managing inventory has become a difficult thing, but not impossible! The main way to overcome such a big change is to accept the change, stock up when you can, and proper tracking and management. Is this the new process that will have to be in place from now on? Who knows! Regardless of how long or how many of these shortages will be popping up, it’s important to find a process that works best for you and your business one day at a time!
