3 Benefits of Tool Inventory Management for Your Construction Business

January 24, 2020 Patrick Hogan

One-Key inventory app lets you manage and track tools and equipment via computer or smartphone

One of the biggest challenges in the construction industry, especially for small and growing firms, is the management of tools and equipment. As the demand for your business starts to rise and you bid on more projects, the need to have the right tools at the right time increases. A client expects that you have the equipment needed to complete a job and doesn’t accept tooling-related delays. Without adequate preparation, your business may not be able to deliver a project on schedule and within the allotted budget. 

Equipment is a big investment for construction businesses, and has a direct effect on your two biggest cost centers: labor and materials. It makes sense to also exert major effort in managing and maintaining them. When tools are thoughtfully looked after, they continue to work properly and arrive when and where they’re needed. This helps you maximize the uptime at your projects, prevent expensive setbacks, and carve out your company’s competitive advantage. That is why many firms in different industries—from distribution to aviation, healthcare to retail—also invest in a tool inventory management system to track and manage equipment. While the construction sector is a different environment, where managing tools is far more complicated, the benefits of successfully implementing an equipment logistics platform are well worth it: streamlined productivity and increased uptime. 

Despite the emergence of software that helps with various functions like field operations, workforce administration, and lien management, construction companies still lag behind other industries in adopting technology. It can be surprising to see many construction companies still using spreadsheets or even pen and paper to track and manage tools and equipment. With so many different types of equipment as well as personnel to use them, construction project managers are facing a difficult challenge. Employing an outdated inventory management system is highly inefficient and costs a construction firm a lot of physical and human resources. Mismanaged equipment and tools can even lead to costly construction mistakes and damage the reputation of a construction firm.

That is why it is crucial that construction firms invest in a proper tool inventory management system. Nowadays, there is practically a software solution for every business need, and tool inventory management is no exception. If you are still on the fence about getting one, here are some of the reasons why construction firms need tool inventory management.

Prevention of the loss and theft of tools and equipment

Misplaced construction tools

One of the most obvious reasons for tool and equipment inventory management is preventing loss. Construction sites are notorious for having a large number of tools and equipment for use. If a construction firm is juggling multiple construction projects at a time, it is important to know where its tools and equipment are located so they can be used when they are needed. 

The nature of new construction and service creates a transient workforce. Where you are needed to day may be different from tomorrow. Moving skilled labor across jobs creates the opportunity for leave-behinds or unintentional carry-offs. Misplaced construction tools actually lead to big financial losses for construction companies, especially small firms. Getting good equipment, especially top-of-the-line tools, provides a competitive advantage for construction businesses but it also requires a hefty investment. With deadlines looming and personnel not knowing where a particular piece of equipment is, a company may end up buying a replacement, where they otherwise didn’t need to.

Construction site theft

Construction site theft is another common problem that project managers face. Since many construction sites do not always have an effective security system in place, they become easy targets for thieves for quick money. Heavy equipment, hand tools, and metals are all high-value targets with a strong resell market. According to the National Equipment Register, annual estimates of the cost of equipment theft vary from about $300 million to $1 billion, with most estimates pegged at $400 million.

The cost of losing construction tools and equipment from either misplacement or theft extends far beyond their monetary value. You also need to factor in the delays in work and their effect on project delivery, the increased insurance premiums for new tools and equipment that you rent or purchase, and the damage to your reputation should you not be able to deliver what is agreed upon in your contract. 

How tool inventory management can help 

A tool inventory management system can easily solve these pain points in the construction industry while giving you more autonomy in using all your tools and construction equipment. For instance, a tool inventory management solution allows you to set an accountability system that shows you who checked a tool out for use, how the tool is being used, where the tool is currently located, and which tools are yet to be returned. This crucial tool tracking data can be used to know where each tool or piece of equipment is located and help you more efficiently manage your inventory. In addition, this data lets you know which employees are misusing tools and who needs additional training.  

A tool inventory management solution may also have scanning features using add-on hardware like barcodes and tracking tags. Using a dedicated scanner or even your mobile phone, you can scan your valuable assets and update a central database on their locations as well as the date when they were scanned. Another useful feature is geofencing, which lets you set up a perimeter over a designated construction site and alerts you when a particular tool or piece of equipment leaves the site. 

Management of maintenance, repair, and replacement needs

A specialty tool or piece of heavy equipment breaking in the most inopportune moment can end up costing your business. Over time, it is inevitable that some of the assets you use in a project break down either due to normal usage or misuse. That is why it is important to always check if your tools and equipment are in proper working order. Prevention is always better than cure and you will save more by doing preventive maintenance rather than corrective maintenance. 

That said, there will come a time when your tools and equipment are more costly to fix, and a replacement could be the cheaper option. Making the decision on whether to repair or replace your assets needs to be backed by solid data for it to be justified. 

How tool inventory management can help 

Tool tracking software solutions allow you to make intelligent decisions on when to conduct equipment maintenance and when to replace construction tools. Using the usage data collected over time, these applications can give valuable business insights that can help you make a sound business decision. You can even set reorder points to replenish tools and supplies before they can run out simply by setting an alert should your inventory go below the point threshold.

The data collected through tool inventory management also lets you know a particular asset’s maintenance history, including repair costs and its expected lifespan. Using that information, you can calculate when it makes more business sense to buy a new or even an upgraded version of an asset than to repair it. 

Improvement of project efficiency and productivity

Efficiency and productivity are the top priorities of every construction firm. Project managers and their teams are always looking for ways to make construction processes faster and ensure that projects get delivered on time. This also takes into consideration employees’ routine regarding the use of construction tools and equipment and their impact on the processes. 

How tool inventory management can help

Again: it’s all about the data. Tool inventory management lets you gather useful data regarding utilization and helps you identify bottlenecks and streamline workflows. By using check-in and check-out features, you can help workers reserve the equipment that they need in the future instead of scrambling to look for the assets. They get to know which ones are already checked out and which ones they can use, preventing duplicate reservations and conflicts in schedules that hinder productivity. 

Having access to the right tool or piece of equipment for a task at the right time is only possible through effective tool inventory management. As construction projects increase in size and complexity and contractors juggle multiple projects, managing construction assets also increase in difficulty. But with the right strategies in place and with the help of a dedicated tool inventory management solution, construction businesses will be able to overcome this challenge. 

About the Author: 

Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.

About the Author

Patrick Hogan

Patrick Hogan is the CEO of Handle.com, where they build software that helps contractors, subcontractors, and material suppliers with late payments. Handle.com also provides funding for construction businesses in the form of invoice factoring, material supply trade credit, and mechanics lien purchasing.

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