Introduction
“Better Materials Planning” is the first chapter of Kojo’s groundbreaking book, “7 Steps to Better Procurement for Trade Contractors.”
The fifth step in the procurement process is Receiving. This step involves accurately logging deliveries to the jobsite and warehouse with essential information to track inventory, record delivery issues, and maintain a historical record of materials delivered by vendors. However, tracking detailed delivery information can be challenging, especially with large volumes of materials. To avoid issues later in the procurement process, it's vital to have a streamlined process that can promptly relay this information back to the office for further management and record-keeping. Additionally, this information serves as proof for project managers, accounting, purchasing, and vendors in case of discrepancies, allowing for speedy resolution of any issues.
Where inefficiencies exist in Receiving
How is your field tracking deliveries?
Most contractors still rely on paper receipts to track deliveries. This can lead to inefficiencies and errors, such as packing slips piling up on the job site, delayed delivery tracking, and missing or incomplete delivery information. This can cause a lack of transparency, miscommunication, and potential disputes with vendors. In fact, the study found that nearly half of all construction companies surveyed had experienced a dispute with a vendor in the past year!
What’s going on with deliveries to the warehouse?
Your warehouse receives materials which are coming from either vendors or from the field. To manage inventory well, they need to know what materials are for which job and which materials are for general stock.
Incorrectly logging materials to the wrong job creates major accounting challenges and can lead to unnecessary procurement and inventory costs. Similarly, improperly tracking general stock could have significant accounting implications. Properly tracking deliveries to the warehouse is crucial to avoid these issues and ensure optimal inventory management.
How are your delivery receipts logged?
Most delivery receipts come in paper form, but relying solely on paper receipts can kill efficiency and create issues down the line. Some receipts may never make it back to the office, and when they do, the office has to sift through each one manually to find relevant information. This lack of organization can make it difficult to confirm whether all materials have been delivered and received, causing delays in payments and throwing off inventory management.
In addition, paper receipts are often missing key pieces of information. For example, it’s tough to attach a picture of damaged materials to a paper delivery receipt. It’s also time-consuming to attach every delivery receipt to its corresponding PO. This information should be kept together so they can be easily referenced when it comes time to pay invoices.
What great Receiving looks like
Tracking deliveries properly in the field
Inefficient delivery tracking in the field can result in lost time, misplaced receipts, and lack of detailed information about the delivered materials. By implementing a digital delivery tracking system, field teams can quickly and accurately log deliveries, attach photos from their phone, and note any issues such as damaged or missing materials. With digital delivery receipts, the office team can receive up-to-date delivery information instantly, which allows for timely processing of invoices and payments. This saves time for both the field and the office, and creates a comprehensive and easily accessible record of all deliveries and related details.
Tracking inventory properly in the warehouse
Proper inventory management is crucial for efficient materials procurement. A digital inventory management system allows your warehouse manager to log every material coming in, including whether they are for a specific job or for general stock. This helps in tracking inventory levels, decreasing the risk of running out of general stock, and minimizing waste.
According to JBKnowledge’s 2020 ConTech Report, construction companies that use inventory management software have an average reduction of 17% in inventory costs. By having accurate inventory data, purchasing teams can make informed decisions about future orders, reduce the risk of overstocking or stockouts, and help ensure timely delivery of materials. With a digital system, warehouse managers can easily share inventory data with other teams, providing transparency and enabling better coordination.
