Have you ever gone to the warehouse thinking there’s plenty of inventory to go around for a gig, only to find almost none left? This is what happens when supply and demand are out of sync.
Your entire operation is at risk when supply and demand are out of sync. When you understock, you tend to miss deadlines and have dissatisfied clients, which is bad for your business’s reputation. Overstocking can also be a problem. It drains cash flow, increases maintenance costs and clogs up valuable yard space.
But it doesn’t have to be this way. In this piece, we share highly effective strategies to help you streamline your operation and keep your business thriving — no matter the demand. Here’s how you can create an effective inventory system.
How to Create an Effective Inventory Management System
1. Create Tiered Inventory Systems
Instead of keeping a uniform inventory, consider breaking your inventory into tiers based on usage frequency and seasonality. For instance:
- Tier 1: High Demand/High Use: These are your bread-and-butter items—standard portable restrooms, common parts and chemicals. Keep this stock on hand in larger quantities, using real-time inventory systems to monitor it closely.
- Tier 2: Seasonal/Medium Use: Items that are only in demand during certain times of the year (festival units, specialty trailers, etc.) should have a predictive stocking approach. Use historical data and event schedules to adjust inventory accordingly.
- Tier 3: Low Use/Backup: Rarely used items should be strategically minimized but remain accessible. Consider partnering with a secondary supplier who can provide these in emergencies rather than holding costly excess inventory.
2. Build Strategic Vendor Relationships
Establishing strong relationships with your suppliers allows you to set up flexible supply arrangements. This means having agreements in place that allow for fast scaling up or down of orders without significant cost penalties. Building these relationships can lead to benefits like priority delivery or access to inventory even when there’s a shortage in the industry.
3. Adopt a Preventative Maintenance Culture
When your restrooms and sewer equipment are well-maintained, you’re not caught off-guard by sudden breakdowns or having to dip into your inventory unexpectedly. Train your staff to always be ahead of the curve with regular check-ups and servicing. This extends equipment life, reduces downtime and prevents unnecessary inventory spikes due to emergency replacements.
4. Incorporate Rental Pools or Cooperative Networks
This might be a bit more unconventional, but joining or creating a cooperative network with other local or regional contractors can be a game-changer. In such a network, multiple companies agree to share resources during times of peak demand, reducing the need for each company to carry its own redundant inventory. Instead of buying units that sit idle during off-peak times, you can rely on your network to bridge gaps in supply.
5. Revolve Your Marketing Around Your Capacity
Many contractors overextend themselves during peak seasons and lose potential long-term clients by underdelivering. Create marketing strategies that revolve around your capacity, so you’re not scrambling to meet an unexpected demand spike. It’s better to grow steadily than to make promises you can’t deliver on. This means communicating transparently with clients about availability, setting limits and being clear about your operational bandwidth.
6. Leverage a Buyback or Resell Program
For larger items like trailers or luxury restroom units, consider implementing a buyback program where customers have the option to sell the units back to you after a certain period. You can then refurbish and resell or re-rent them at a lower cost. This reduces waste, allows you to keep your inventory flowing and reduces upfront costs for clients.
7. Train Employees to be Eyes on the Ground
Your field employees are your first line of defense when it comes to supply management. Train them to provide detailed feedback on units, parts and materials during each site visit. They should report back on wear and tear, customer usage trends and potential upcoming needs. This will help you predict shifts in demand and manage inventory accordingly.
Stay Ahead of the Game: Master Supply, Demand and Industry Insights
Mastering supply and demand is key to staying competitive and profitable in portable restroom business. That why everyday solutions might not put you where you want to be: top of the pile. It’s easier to come out on top when you use multi-tier inventory systems and train your workers to have a keen eye.
If you’re serious about taking your business to the next level, subscribe to American Liquid Waste Magazine today. It is your surest bet to staying informed about the latest industry trends, expert advice and cutting-edge practices from successful contractors.