We recently had a service engineer visit our home for a comparatively straight forward service call which involved changing a rubber seal on the oven. This took just a few minutes to complete satisfactorily. In this instance our call out was covered under the terms of the warranty on the appliance. However when signing off the paperwork off we asked about future servicing and found that the charge was based on a minimum call out plus a standard charge of £110 to cover any materials. When we queried why the cost of materials is always a standard £110 it was explained that because it was too complicated to be able to track stock so everyone (all customers) are just charged £110.
The company was taking a punt that this would average out over all of its service calls and hopefully they would still make some profit. Now I am certain that the company knew what they were doing and would really not ever allow themselves to be in a position where they were losing money. So who is carrying the cost of these charges? It is most likely to be the end user customers or alternatively the insurance company who covers the customers when they have purchased an extended warranty.
So how different would this be if the company was able to track and monitor stock control of parts and materials?
First of all, the company will know precisely what inventory of stock items they actually have on hand, simplifying stock management.
Secondly the company will know the location of all of the stock. Should they need an urgent part, rather than having to place an order with their suppliers, they can simply message the nearest engineer (or the vehicle) that has the part available. This will save administration, it will also save on the cost of carrying more parts and stock than is absolutely required. Further more depending on delivery lead times the items can most likely be accessed the same or next day, resulting in an improvement in the level of service that is provided to the customers.
Identifying the location of parts required urgently will be made even easier if you are using geo-fencing to help with auto recording of timesheets which record time spent on site and time spent travelling. Although this is usually usually used to calculate the time spent on jobs to ensure accurate billing, the spin off is that the precise physical location of your stock can also be traced almost instantly.
Thirdly and almost most importantly the charges to the end user customer should be lower, giving the resultant knock on effect that customers would feel they have had “value for their money” and be more likely to recommend the service to their friends and business associates.
Admittedly there is the issue of billing the customers for the correct parts actually required on their call out. However as each of the engineers also has access to their own stock levels using a phone app, it is a comparatively straightforward process to bill the customer while still on the job and even to collect payment where required, also on their mobile phone or tablet. Payment for monthly account holders is even easier as there are no changes, they are simply forwarded the invoice on completion as usual.
With the individual stock management in place it is easier to base inventory purchasing on the parts that have been sold or ordered. This will simplify the purchasing process and help to maintain the stock levels at the lowest practical level, meaning that the financing required for working capital is also minimised.
Implementing a regular manual check to verify the stock records will give even further confidence in the electronic records.
It is much easier to track stock items with an expiry date and line items that have been updated or are now obsolete as these can be identified and managed to reduce potential write downs due to obsolescence.