Using tool management software to improve productivity and the bottom line
One of the most widespread problems companies face is effectively managing their inventories, specifically tool inventories a constantly mobile and notoriously easy-to-access body of assets that can be worth millions. The National Insurance Crime Bureau estimates that the construction industry alone loses $1 billion annually from equipment and tool theft. But there are far greater financial repercussions of mismanaged tools than merely lost or stolen inventory: Time is lost when projects are delayed to search for missing tools, or missing equipment is replaced only to reappear several weeks later. Whether through misuse, mismanagement or theft, these losses can produce significant financial shortfalls over time.
But poor tool management runs far deeper than the perceived warehouse difficulties. It affects every department in the company. Ineffective tool management results in issues that span safety, accounting and human resources:
- Human Resources Time spent searching for lost tools is time taken away from a job, leading to slowed completion and possible penalties for nonperformance
- Safety Ineffective management of tool calibrations results in tools that don't work properly in the field and can cause injury, and the inability of a company to prove necessary testing was performed increases company liability in the event of an accident
- Accounting — Ineffective tool management leads to higher rates of lost, stolen or broken tools, the costs of which are absorbed by the company. Additionally, since the tool inventory can be a substantial asset for large public companies, an effective tool management system helps ensure compliance with the Sarbanes-Oxley Act of 2002
Understanding The Problem
The loss of just one tool results in much more than a loss of the value of that tool. For starters, when a tool is lost on a jobsite, the job that must be completed with that tool is inevitably delayed. When one job is delayed, subsequent tasks are postponed, slowing down the entire jobsite.
Additionally, time is spent by employees searching for the tool. If they don't find it, the project manager is included in the task. Still not located, a replacement tool must be ordered, involving the warehouse manager, and accounting must allocate funds for the replacement. Once the tool arrives, it must be recorded and transferred to the jobsite.
In the end, the time and efforts of nearly a dozen employees will have been used to replace just one lost tool. All of this time spent to replace or find a lost tool is diverted from the real task of finishing a job on time and within budget.
Compliance and Consumables
Regulatory agencies require that tools be regularly certified, creating liability problems for companies that cannot provide proof of such measures. Various tools have various requirements, all of which must be performed according to set schedules. In large inventories, just keeping track of what pieces of equipment are due for recertification can be a difficult task. Beyond certification, employees must be trained to use specific tools, and companies should have a way to access such information. If a company allows an employee to use a tool and he or she has not been properly trained to do so, the company could be held liable in the case of injury.
Related to the problem of tool loss is the likelihood that many items must be continuously replenished. These consumables raise a new issue of inventory management, because without effective tracking, effective ordering is impossible. Without access to reliable inventory levels, accounting is left to guess at how much should be allocated for consumables replenishment. Often, the result is misappropriated funds that could have been better spent elsewhere. Or worse, not enough money will be allocated for such purchases, leading to a shortage of supplies and the slow-down of a project.
Automated Tool Tracking Systems