Inventory Control

Inventory control sounds like something only the big companies need to worry about. Then you go looking for the thermal drone you paid ten thousand dollars for and nobody can tell you where it is. That happened to my guest this week. An employee checked it out, never checked it back in, and by the time the drone was needed for an apartment inspection in Houston, both the drone and the employee were long gone.

I loved talking with Eric Oberembt. He owns D&M Roofing, the company his grandfather started back in the sixties, and he built an app called InventoryHQ after he tried running construction inventory tracking on a clipboard across two warehouses and watched it fall apart. He is blunt, he is funny, and he put real numbers on something most of us have been calling the cost of doing business. Keep reading and you will see exactly where the money slips out and what it takes to stop it.

What You’ll Learn

• Why inventory control is the profit leak almost nobody goes looking for
• How a five percent job costing error turns into forty thousand dollars
• What most owners miss about tool tracking and disappearing ladders
• The one thing that skews your margin on every repair job
• Where leftover material goes when nobody puts it back on the shelf
• A simple way to pay your production team for protecting the budget
• The commission mistake hiding inside every improperly costed job

 

Key Moments…

[3:49] When Inventory Started Disappearing

[4:56] Five-Month Waits For Material

[8:30] Why Inventory Control Breaks Down At Scale

[10:03] The Cost Of Doing Business Excuse

[13:08] The Ten Thousand Dollar Drone Nobody Checked In

[16:30] Buying A Box Of Screws He Already Owned

[20:44] Why Repair Margins Look Better Than They Are

[22:31] Pre-Capping And Post-Capping Every Job

[33:36] Equipment Tracking And Mobile Service Trucks

[42:50] The Commission Leak Nobody Catches

 

Why The Cost Of Doing Business Is Usually A Choice

Eric ran D&M Roofing for years doing construction inventory management with a clipboard on the shop wall. Pull four rolls of felt, write down the job name. Return a roll, write that down too. The office manager scanned the sheet, uploaded it to the CRM, and tagged accounting.

That works fine when you are standing there every day watching it happen. It stops working the moment you have two locations, or you are running more than a job a week.

When he started asking other owners about it, most of them shrugged and called it the cost of doing business. Eric does not accept that answer, and neither do I. Being in the dark about what you own is not a cost of doing business. It is a decision to stop looking.

Good inventory control is not complicated. It just has to live somewhere other than a clipboard and somebody’s memory.

 

The Box Of Screws You Already Paid For

Eric told me about a demo he ran with a commercial roofer down in Florida. The crew needed ten twelve-inch screws with plates to finish a flat roof. Those screws run five to six hundred dollars a bucket.

The owner knew he had two open buckets sitting in his shop. His crew had no way to know that, so they bought another five-hundred-dollar box on the way to the job.

That box gets costed to the job. The margin drops. And back at the shop, there is now a third open bucket nobody will touch for months. Sneaky Leaky does not even have to sneak when your inventory tracking lives inside one person’s head.

Now his guys open the app on their phone before they leave. If the screws are on the shelf, they swing by and grab them instead of driving to the supply house.

 

Why Your Repair Margins Are Lying To You

This one caught me a little off guard. Say you finish a shingle roof and have half a bundle left over. You opened it, so you cannot return it, and that full bundle already got costed to the job it came from.

Most crews toss it or set it on a shelf and forget it. Then a repair comes in, somebody grabs that half bundle, and the repair shows up on paper with almost no material cost at all.

Eric has watched owners see seventy-two percent margins on repairs and think they stumbled onto the most profitable work in the company. They did not. They gave away material they had already paid for. Put that half bundle back into stock at twenty-five dollars, and it gets costed to the repair like everything else, and you finally see what that job really earned.

 

Paying Your Team To Protect The Budget

Eric does something with his production team that I wish more owners would copy. Every job gets a pre cap and a post cap.

• The pre cap is the budget: every part, piece, and labor hour priced before the job starts
• The post cap is what the job actually costs once every invoice is in
• The delta between the two is what his production team gets bonused on, as long as they land within three percent

It forces them to build the estimate tight and right. Build it too fat, and you lose the job, so there is no bonus to earn. Build it too lean and you miss the delta. Then during the build they are watching the telehandler rental, counting rolls of TPO, and asking where the waste is going.

The way Eric puts it, you do not get rewarded for just doing your job. You get rewarded for doing it well.

 

The Leak That Shows Up In Commission Checks

I asked Eric for the profit leak most owners never think about, and it turned out he had been sitting on it the whole episode.

In roofing, he figures about seventy-five percent of companies pay reps or service techs on the profit of the job, or bonus them against profitability. So if your costing is off by five percent, which he says is the construction industry average, and you are paying out thirty percent of profit in commission, you are writing checks against profit that was never there.

On a three million dollar company running a hundred fifty to two hundred fifty jobs a year, he puts that at thirty five to forty thousand dollars a year in overpaid commissions. That money never had to leave. It just needed somebody to see it.

That is the whole case for inventory control. You are not doing it to police your crews. You are doing it so the numbers you pay people on are real.

 

 

About Eric

Eric created InventoryHQ to solve a problem in his own contracting business: keeping track of materials across the warehouse, trucks, and job sites. He needed to know what was available, what each job used, and what those materials actually cost. Those everyday needs shaped InventoryHQ.

 

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Access Eric’s InventoryHQ Profit Leak Calculator so you can find out how much of your spending on inventory is causing you problems. GET IT HERE. 

 

Diane’s Resources: 

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