Case Study – Stock Management in Construction

Script Monkey has implemented stock management for companies in the construction and music fields: exactly the same logic!

A well-known construction company had grown over 20 years into a player in the Mechanical Services space. Systems had evolved with the company as it grew but were starting to fail as the company turnover exceeded tens of millions with 20-30 concurrent projects varying in size working for 20+ clients.

What would happen with stock was that site managers would order new stock via the purchasing team from suppliers and because no live inventory existed for the main stores, stock would be bought even though it was already in the company stores.

At the end of each project, any left-over items would be returned to stores, but nothing would be labelled or marked, preventing the stores manager from correctly identifying the materials to allow the purchasing team to buy less of the items newly requested and supplement the new orders by calling off from stores.

Due to time pressure, purchasing was pushed to order new each time and the value of stock held in stores, mostly returned from finished projects, increased over time until it was worth in excess of a million pounds. Clearly something had to change...

After detailed review with all of the concerned roles, a system was specified as follows:

Every item used by the company was given an item code.
A mapping system was created so when site managers ordered from catalogues without providing the correct item codes, the purchasing team could easily assign the correct item codes.
No new order was given to suppliers until stores confirmed the stock count for every item on a new requisition.
After mapping, site managers were given their requisition back showing all correct item codes and asked to use these items codes next time.
An importer automatically linked Excel requisitions to Item codes so each new import became easier as site managers adopted the new numbering.
Any order for an item would be satisfied from stores stock and only balances ordered from suppliers.
Total quantity previously ordered by each site manager is shown on the manager’s ordering form showing total ordered, total delivered and total pending delivery, if any. This prevents site managers from over ordering when materials are still pending from suppliers or stores.
Total quantity returned from sites to stores is logged to see which managers overestimate their materials during a project.
Once new orders reached purchasing, the system generated purchase orders using the existing Excel PO system, so no visible change to output occurred, just maximization of stock usage.
Suppliers can be linked to sites and items linked to suppliers, so the ‘allowed’ materials per site could be controlled to prevent unapproved items being requested by site managers.
Up to date supplier catalogues were linked into the system to ensure site managers were referring to the correct codes from manufacturers.
An item could be supplied by multiple suppliers with automatic select at time of order based on a combination of lowest price, stock availability and lead time, all configurable.

The net effect of these measures was to reduce the stock in hand by over 50%, releasing tied up cashflow into the business and increasing profitability significantly in the first year.