Commercial Food Services Guide to Inventory Management: Tools & Processes to Improve Cash Flow

Despite being critical to the financial health of your organization, inventory management is one of the biggest challenges commercial food equipment service companies face. Here are a few of the biggest inventory management obstacles commercial food equipment service leaders are up against:

1. Managing inventory can be time-consuming. 

In the commercial food equipment service industry, you have to juggle a range of inventory-related tasks all at once. In addition to just tracking parts inventory, you have to establish benchmarks and make sure your parts levels are satisfying your customers’ needs. At the same time, you must know what parts you have on hand, establish the right pricing information to maintain manufacturer relationships, and understand which techs need which parts to complete a job. 

If you’re trying to manage all of these tasks manually, your team will feel overwhelmed quickly. Additionally, if you’re asking inventory management leaders to hop from program to program to track all of these areas of the business, it can lead to costly errors and wasted time. 

2. Commercial food equipment service companies often lack processes.

Simply put, many commercial food equipment service companies don’t have inventory processes to keep up with volume. Too often, a company will get by with limited inventory management processes as a young business only to run into chaos when the company grows. As a result, commercial food equipment service companies will frequently try to piece together data from multiple systems, or leaders simply won’t know how to start putting together an inventory management system. All the while, money leaks from the company’s bottom line, and the risk of losing customers rises. 

3. Money may be rolling out of your operation. 

Often, commercial food equipment service companies don’t have the foodservice equipment management systems to track return credits or manufacturer pricing discounts. That can end up costing your company. If you have parts that you could be returning for credit just sitting in your warehouse, savings could be flying out the window. At the same time, you need to understand the costs of each piece of equipment if you want to set pricing that’s fair to your customer but profitable for you. 

4. Inadequate parts management can delay jobs.

If you want your techs to deliver the best service possible, they need to have the right part in their hand in time to complete a job. Any holdups in that process mean you’re reaching fewer customers and bringing in less revenue. 

In addition to needing to know what parts are on what truck, you also need to know which parts are in stock in your warehouses and the location of go-boxes. After all, if your techs are showing up to grab a part and it’s not there, or the go-box location has moved, it can delay jobs. Ultimately, any kinks in your inventory management process stop your techs from completing jobs quickly. That means you’re not able to deliver service to as many customers, reach your full revenue potential, or drive a level of customer satisfaction that promotes exponential growth.

When you’re going about day-to-day operations, it’s easy to see how much time your team wastes on manual or inefficient inventory management. However, what’s not always as obvious is how inefficient inventory management dries up cash flow throughout your entire organization. Every time a job is delayed, a part is over- or understocked, an eligible part isn’t returned for credit, or another inventory issue pops up, your company’s cash flow suffers. Here are a few tips to improve your inventory management processes and increase cash flow: 

1. Strike the perfect parts inventory balance.

Efficient inventory management requires a constant balancing act. If you don’t order enough, you may not have the right parts available to complete a job. If you order too many parts, you may end up being low on cash. That’s why it’s important to have an all-in-one software solution that helps you see stock levels, know what parts are in demand, and alert you when it’s time to replenish inventory. The software does the inventory management balancing act for you, so your team spends less time trying to track down information and automatically keeps money pumping through your organization. 

2. Use proactive inventory management practices to master the supply chain. 

Recent supply chain disruptions from COVID-19 are highlighting the importance of proactive inventory management processes. A recent Statista report found that organizations are now losing $184 million per year on average due to supply chain problems. 

Those challenges are hitting the commercial food equipment service industry especially hard. According to a North American Association of Food Equipment Manufacturers study, 96 percent of U.S. foodservice equipment and supplies manufacturers say they’re running into supply chain problems, such as shipping delays, shortages, and high costs. 

Going forward, commercial food equipment service companies can avoid supply chain problems by automating their inventory management processes. For instance, advanced software solutions will include automatic replenishment features that examine lead times and help you stay ahead of supply chain shortages. By auto-ordering parts based on your inventory needs, these solutions help you keep your inventory at the right levels—even when the broader supply chain is shaky. 

3. Start controlling pricing and manufacturer relationships.

It’s not uncommon for commercial food equipment service companies to deal with different parts from tens of thousands or more manufacturers. You need to maintain relationships with all of those suppliers as well as your own customers. That’s why it’s so important to have a solution that gives you visibility into profit margins for each part. With a breakdown of margins for all of your inventory, it’s easier for you to categorize those parts, create contracts, and meet each customer’s needs. 

For instance, imagine you have a deal on a part where you get a discount with the manufacturer whenever it’s replaced. You’ll want to pass that discount on to your customer, but you can’t afford to price your part below your margins. All the while, you may need to hit a minimum level of orders or a minimum dollar figure with your manufacturer in order to secure that discount. To stretch your company’s cash as far as possible, you need to track and manage all of this information. With a tool that shows you the profit margins for each part, as well as all of your parts’ order levels for each manufacturer, you’ll have what you need to set the best prices for your company and maximize profit.

4. Take advantage of manufacturer credit.

The best field service management software doesn’t just give you visibility into inventory levels. It will also help you monitor and manage manufacturer credit. When you know where your dead stock is, what parts can be returned for credit, and which parts you need reimbursements for, you can increase your cash flow. What’s more, having a system to keep all of your manufacturer credits straight for your team means they’ll spend less time sorting through that important info on their own, freeing them up for other tasks. 

Managing your inventory may be easier than you realize. Advanced field service management software will allow you to track inventory and monitor manufacturer relationships within a single platform. Still, not all software will provide the same advantages. If you want to simplify inventory management and increase profit, make sure your all-in-one field service software solution includes a few critical components.

1. Easy cycle counts help prevent shortages.

Frequent cycle counts are critical if you want to avoid having parts shortages or not enough cash on hand. According to the Commercial Food Equipment Service Association, the typical commercial food equipment service company fully turns over inventory nearly four times annually. That means your team should be conducting cycle counts at least four times per year to avoid overlooking inventory or losing valuable parts. 

Unfortunately, if you’re tallying up parts manually, you’re risking costly errors and wasting valuable time. Advanced field service software solutions, such as the Global Warehouse mobile app, let you manage inventory from your mobile device. These tools make it easy to conduct cycle counts and make sure your records match up with your physical inventory numbers.  

2. Clear SKU tracking generates inventory reports.

If you want to manage inventory efficiently, you need a software solution that taps into precise stock keeping unit (SKU) tracking. This technology will generate inventory reports that show you what’s selling, what’s not selling, and how much of a part you should be keeping on hand. That all helps you strike the right balance of parts inventory and allows you to boost the amount of cash you have to invest in your company. 

3. Flexible parts ordering gives you options.

If you want to maximize profit from your inventory management processes, you need to determine what type of system works for your company’s layout. For instance, if you decide to empower your techs to order parts and write purchase orders on their own, you’ll need a parts ordering system that’s clear and easy. In this less centralized type of model, you can order parts quickly and efficiently with an asset such as Parts Town.

On the other hand, you may want your company to approve and order parts through a single, centralized system. In this case, it’s important to have a software solution that gives you visibility into what parts you need and makes it easy to manage parts, pricing, and returns from a single platform. In all cases, the best field service software will give you the option to thrive in whichever parts inventory management style you choose for your organization. 

4. Complete inventory control provides full visibility.

The best inventory management systems will track every instance of your inventory process. Simply put, if you don’t have one area of your inventory covered, it can throw off cycle counts and your entire process. To master inventory management, make sure your software system shows you activity for all of the following: 

• Main warehouses
• Truck warehouses
• Go-boxes

The best all-in-one software solutions will give you full visibility into all of your parts storage facilities. That includes the ability to track go-box locations and real-time parts levels at any floating parts facilities.