Saw another add encouraging landscapers to stock up on product. They called it “buying like a pro.” Hmmmm, is that how professional contractors buy nowadays? No, it is not.
Bulk stock-up programs are a thing of the past in most contracting trades. Terms like “0-Inventory,” LEAN Construction, and “VMI” dominate the materials strategies in all the trades, except the landscape world. For many, we’re still operating like its 1993.
In the 90’s we saw a 10 percent growth in the landscape trades every year. It was easy to plan on product from the next. Not so any more. The concept of stocking up through bulk buys has perished in almost all industries. Beginning with Just-In-Time inventory the concept has permeated all businesses. Blossoming into many philosophies, the Just-In-Time movement has transformed how businesses operate. And for the better!
Note the last stop on the above graphic: Lean Ideal.
Integrating Supply Chains
That’s where we at Wolf Creek Company come in. As a contractor, you focus your effort on mobilizing men, machinery, and materials to install jobs. Getting better at those core functions is the heart of Lean Construction.
Materials acquisition is part of the “air” that can be squeezed out of your system. How much does that impact you? See the pie chart below.
Construction has one of the worst performing productivity percentages of all industries. Note the Non-Productive and Other time, which equals about half the labor hours of the surveyed construction companies. For comparison, manufacturing has accomplished the most impressive productivity and is at 84% last survey.
Obviously the Installation time is what earns you money, so moving more hours into revenue generating activity makes you more productive and profitable.
Non-Productive time breaks down to:
• Waiting 9.3%
• Material Management 14.6%
Other time is:
• Staging/Moving 7.8%
• Socializing 8.6%
• Other 9%
The other is a long list of stuff that gets in the way of getting jobs installed. So if you match up with the averages in this survey, 8.6 percent of your payroll is paying guys to talk and have fun, 9.3% is to wait around, and 14.6% is materials related. In other words your are paying a third of your payroll expense for guys to wait around, socialize, and get materials. Lets hope you are not like the average construction company!
Material logistics is a function you can improve. Buying bulk is not a good answer because of shrinkage (10-15% typ), debt/liability, wrong items stocked, time to quote, buy, transport, organize, and track. Vendor Managed Inventory (VMI) is hands down the best answer.
We call our service WolfDens. Our stock, your location, we manage. As simple as that. Definitely saves hours per week and takes inventory completely off your desk. Saves you at least half the time you now invest into managing materials. If you are that average contractor documented above that means saving or redirecting 7 percent of your labor hours.
If you are a HindSite user, we are now tied in so you can download current inventory item information. Either to populate your database during set up or refresh for current pricing.
You can also place orders directly from the Hindsite stock replenishment report.
Invoice Import Utility
If your are a QuickBooks user you can directly import our invoices into your payables. In other words: no paper, no typing, no errors, no wasted time. Our invoices show up for your approval then into QuickBooks they go.
If you use any program that has an inventory database, we can provide a spreadsheet with your costs for upload. Handy the first of the year to update your pricing.
All of these are designed to help you squeeze air out of your system and move wasted hours from the overhead column into the revenue generating column.
-Scott Knowles, President of Wolf Creek Company