van inventory shrinkage

[Rewire]

We are on a constant quest to stem the bleeding of profit. We are now looking at ways to eliminate material loss on our service vans. We need to have accountability for the material to rest with the tech assigned to the van. We are looking at charging the tech for shortages in inventory as a way to make them more aware of the need to closely watch material on and off the vans. I have not worked out all the details but would be interested if any other service companies did something similar

 

[John120/240]

What is the value of your lost material ? A receptacle, receptacle plate, & old work box or are you talking about can lights & fart fans, big ticket items ? I would assume that your guys drive the vans home nightly ? It all comes down to trusting your employees. Sometimes the guy making $15/hr feels that he is underpaid/entitled to little freebies vs the professional that you pay $25/hr. I would balk BIG time if the boss tried to dock my pay (we had one, two,three guys per van depending on circumstances)

 

[__dan]

In order to bill someone for materials, you would have to be able to show that they received them, not simply that the materials fell out of the inventory tracker. Shorting the guys paycheck for arbitrary losses seems like a quick trip to a wage dispute complaint.

In order to claim that your employee insures you for losses of materials, you would have to be able to show that you have that written contract and that you pay a premium for this insurance, to claim on the policy.

The only thing I can think of as an inexpensive workable system is to have individual accounts per man at the supply house to draw out materials. Then you can look over the supply house invoices to see if the guy is doing service changes on the side with your material off the books.

You could pay the guy an incentive of $100 extra every week if he hits targets you set. But if you thought he was losing that $100 for the week, would you deduct it from his bonus or just fire the guy. If losses are noticeably a problem, it would be one guy taking 97% of what disappears and not 10 guys taking 10% each.

Losses occur statistically every year despite best efforts to mitigate. The names changes every year but the loss and payout rate remains persistent. Car fires, life insurance, big box theft, never stops and happens every year, at a consistently repeating rate.

 

[George Stolz]

I have not worked out all the details but would be interested if any other service companies did something similar

Seems to me that's forgetting whose side your employees are on. If they can't be trusted with the material then they shouldn't be on the road in a van. Antagonizing one's own crews can only lead to quiet retribution like calling for a salt delivery, IMO. Bad karma.

 

[GUNNING]

get them to buy in.

get them to buy in.

Seems to me that's forgetting whose side your employees are on. If they can't be trusted with the material then they shouldn't be on the road in a van. Antagonizing one's own crews can only lead to quiet retribution like calling for a salt delivery, IMO. Bad karma.

Give the help a percentage of the materials used on a service call and let them find the loss for you. Does not need to be much but enough to get their attention. Tell them they have to return 100% of any imaginary items they bill out when disputed by the customer. ( the ol ata boy / all crap routine) Cap it and treat it as a bonus. It will get you a lot more motivation.


Might want to start a PO system and get them to use it.

 

[hardworkingstiff]

IMO, instead of a penalty for loss materials, a bonus for the tech that has the smallest inventory shrinkage would have better results.

In the early 90's, the executive VP of the company I worked for (as a construction manager for a pump and tank company) was visiting and the topic of inventory loss came up. I told him I thought we were losing close to 10K (a guess on my part) a year (I billed about 2 million a year out of that department). He asked what we could do about it, and I told him that installing the controls to try to reduce the inventory shrinkage would cost more than the inventory that was "lost". Nothing more ever came of it.

So, will you save enough on "lost" inventory to pay for the cost of not losing it?

 

[ptonsparky]

We struggle with the inventory tracking as well. Mind boggling to me that a SE change won't have a loadcenter listed on the job ticket or items tagged to projects don't get transferred to the projects at billing.

Year end is dependent on inventory control. I eat the first $xxxx because no one can track each foot of #12. Not worth the effort. Cost of doing the inventory may be more than the loss of materials but we have to clean and sort eventually.

 

[Rewire]

We struggle with the inventory tracking as well. Mind boggling to me that a SE change won't have a loadcenter listed on the job ticket or items tagged to projects don't get transferred to the projects at billing.

Year end is dependent on inventory control. I eat the first $xxxx because no one can track each foot of #12. Not worth the effort. Cost of doing the inventory may be more than the loss of materials but we have to clean and sort eventually.

Techs not putting items on the ticket is probably the main reason for inventory not balancing. We inventory vans every month it has gotten easier as we have standardized how the vans are set up. When we started I found two vans each with a box of 100 1/2 pvc MAs . We were over buying material which was costing us. We now use POs to control that but if we had not started inventory tracking we would never have seen the issue. It is hard to see the direct benefit of doing inventory until you stop doing it.

 

[fmtjfw]

Be careful

Be careful

In WV docking someone's pay for missing items is illegal. My son was going to dock a former employee's last paycheck for the missing iphone. His wife, the attorney told him not to do it, it was illegal. I'd be willing to guess that works in the same way in many states, except, perhaps in "right-to-work" states.

 

[gadfly56]

Our techs have a target for dollar value of work per day, averaged over the month. It encourages them to put every box and valve they use on the job on the job ticket. Also, when they need anything from stock, there's always a pull sheet with their name on it. We kinda/sorta have a system for tracking truck stock on a running basis, but I don't think it's pushed much, probably because inventory shortages at this time don't seem to be an issue.

 

[ShauwnC]

Be very careful

Be very careful

We are on a constant quest to stem the bleeding of profit. We are now looking at ways to eliminate material loss on our service vans. We need to have accountability for the material to rest with the tech assigned to the van. We are looking at charging the tech for shortages in inventory as a way to make them more aware of the need to closely watch material on and off the vans. I have not worked out all the details but would be interested if any other service companies did something similar

We are a service company in the Northern Virginia area . We also struggle with material tracking . I have found that the trust in an employee is what is the most important . As another member mentioned , if you don't trust them they should not be on a truck . I will also add if they are not organized ,efficient, and know the code they should not be on a truck . It is illegal in Virginia to dock an employee for anything ( we found out from docking a guy $10 for a mistake his helper made as his helper is his responsibility ). For us we look at the fact of if a guy is profitable or not . If he is not then as they say " you don't have to go home ,but you can't stay here !"

We have guys apply all the time that are not geared for our aspect of the trade . We mainly do residential and we have some light commercial clients . We have guys apply all the time that want a foreman position . We have come up with a test that allows us to tell if a guy is used to residential work or just knows how to do duct banks . We also use the job number as a po number at the supply houses and it will raise a red flag if there is something on there that should not be . We also order the parts for contract jobs ( panel jobs,recessed light jobs etc. ) and tell techs they are not allowed to make purchases over $50 without authorization . This has seemed to help . There is still some loss but it makes it easier to track the big ticket items . I would rather buy a plate because the one on the van got scuffed up riding on the floor than buy a panel job with breakers because we didn't know it was purchased .

Hope this helps !

 

[PetrosA]

I think this problem is somewhat inherent to a pricing scheme that's not based on T+M (and if I recall correctly, you use a pricing scheme). There's no direct motivation to itemize materials or even time spent at a job since they don't really relate to the job price and therefore, they don't relate to the employee's earnings. You will need to find some other form of motivation for your guys to be deliberate about record keeping that will make sense to them.

I have found it helpful to snap photos of different aspects of jobs as a reminder of what was done, how it was done, etc. and it helps me remember materials from time to time as well. If your guys have camera phones you could implement something like this as well.

 

[macmikeman]

Robot electricians won't need to take potty breaks......

 

[cowboyjwc]

This has been an issue since God may contractors. I remember a GC getting mad one time as he picked up a Simpson strap and said "my guy's will step over this $50 strap all day, but fight over a dollar bill they see laying on he ground.".

Also remember, that as the boss you are just as responsible as your guys are, to know what they are doing. As has been mentioned before, if you don't trust them then get someone else or do it yourself.

 

[ptonsparky]

This has been an issue since God may contractors. I remember a GC getting mad one time as he picked up a Simpson strap and said "my guy's will step over this $50 strap all day, but fight over a dollar bill they see laying on he ground.".

Also remember, that as the boss you are just as responsible as your guys are, to know what they are doing. As has been mentioned before, if you don't trust them then get someone else or do it yourself.

It doesnt always breakdown to mistrust of an employee. It is more a matter getting everyone to fully understand how important they are in the profitability of a company. Paper work is part of it.

 

[PetrosA]

It doesnt always breakdown to mistrust of an employee. It is more a matter getting everyone to fully understand how important they are in the profitability of a company. Paper work is part of it.

And that's a tough part of it when you use a pricing scheme. The employees know darn well that once the customer accepts that price, it doesn't matter what you use to get the job done, it's already included. The only person who can see the importance of tracking material use is the business owner. Until you come up with a system to reward the employee for taking part in the busywork needed to track material use, they have no motivation whatsoever to do so.

I don't know the ins and outs of pricing this way, but I imagine that if a customer wants a dimmer changed, there's probably one price that covers pretty much any common household dimmer from a cheap Ariadne to a higher dollar Skylark but probably doesn't cover ELV, RadioRA or an unusual 1500W two-gang slider dimmer, at which point yeah, you need to keep track of stuff.

 

[George Stolz]

It doesnt always breakdown to mistrust of an employee.

Perhaps not - but when you attempt to gig me for a missing part, you are accusing me of stealing it. If assumption was that the part was billed for (but the paperwork missed) then there would be no reason to charge a second time for the missing part. Charging for the missing part is essentially an accusation of theft.

 

[Rewire]

Perhaps not - but when you attempt to gig me for a missing part, you are accusing me of stealing it. If assumption was that the part was billed for (but the paperwork missed) then there would be no reason to charge a second time for the missing part. Charging for the missing part is essentially an accusation of theft.

It is called accountability. Charging for the missing part is enforcing that accountability. An employee who feels he has no responsibility for 6 grand in parts in his van is not an employee I would want. an employee who balks at being held accountable for that material is definatly not an employee I would want.
in the words of Ronald Regan trust but verify.

 

[fmtjfw]

It is called accountability. Charging for the missing part is enforcing that accountability. An employee who feels he has no responsibility for 6 grand in parts in his van is not an employee I would want. an employee who balks at being held accountable for that material is definatly not an employee I would want.
in the words of Ronald Regan trust but verify.

Your state may allow you to do this.

Deduction - An employer may deduct funds from an employee?s wages for cash register shortages, damage to equipment, repayment of a cash advance or loan, for purchases made at the place of business, or for similar reasons. Deductions can be made from an employee?s wages as long as the deductions do not take the employee?s wages below the required minimum hourly wage rate.

http://www.labor.mo.gov/DLS/General/reducing.asp

I'd check with a lawyer before I'd try it if I were you.

 

[stevenje]

It doesnt always breakdown to mistrust of an employee. It is more a matter getting everyone to fully understand how important they are in the profitability of a company. Paper work is part of it.

It has been my experience over the years that material lists filled out at the job site are more accurate that those filled out later.