Four Principles of Inventory Management for Your Decorative Concrete Business

I had humble beginnings in inventory management when at 12 years old, I organized inventory and ordering for my mom's flower shop.

I eventually became an operations manager for large regional retail electronics and furniture stores managing 12-45 million dollars worth of inventory.

While the average decorative concrete professional may not have millions of dollars worth of inventory, the same inventory management principles apply.

As we jump into these principles, don't miss our bonus discussion on the difference between disposable and consumable supplies for a simple boost to your profits you may be overlooking.

Principle #1: Maintain a min/max system

Calculate the minimum amount of materials to keep on hand at any given time by determining the average square footage of your most popular systems.

For example, I maintain 1,000 square feet of all of our most popular systems at all times.

This includes skim (dry component and wet modifier), pigments, pattern tapes, and our most common sealers. We also keep backup tools in stock like pool trowels, margin trowels, magic trowels, jiffy mixers, mixing buckets, diamonds, and diamond blades.

We recommend choosing three primary systems to offer prospective customers if you are just starting out. Create sample boards of those three systems and, based on this first principle, keep the average square footage of supplies in inventory at all times.

Pro tip: When you show the product, be prepared to install it. Don't show samples or photos of something you can't get because it is back-ordered or unavailable.

So far, we've only discussed the min of the min/max system. To thoroughly follow this principle, you must also know the maximum amounts you should have on hand.

Decorative concrete products and supplies have a shelf life. You don't want too much product that you won't be able to use within the shelf life.

We use Estimate Rocket for all of our estimates and work orders. With Estimate Rocket, I can run a report to see all of our systems sold and the average square footage of each system. This helps me determine our average usage over the last couple of months.

Let me give you an example. If you have a shelf life of 6 months on a particular sealer, you probably don't want more than three or four months of usage on hand. That way, you never bump up on or exceed your shelf life expectancy.

Principle #2: Have proper storage space.

Proper storage space takes into account room and temperature.

Shelving, dry spaces, and climate-controlled spaces are all components of proper storage space for your decorative concrete inventory.

In south Louisiana, where I live, we deal with high humidity, so the moisture in a garage or a storage unit may be too high for some of your dry component products. You won't be able to store them in this type of space for long without affecting the life expectancy and effectiveness of the product.

We also deal with high temperatures, so we need a climate-controlled space for sealers, epoxies, and pattern tapes to extend shelf life.

Storage of bulk products should never be in your work trailer or truck because of extreme temperatures, high or low.

You will also need a large enough space to store items properly to prevent damage.

Also, be sure you rotate your stock.

When you get new supplies, ensure all your old product slides forward and your new materials go in the back. This doesn't just apply to expensive sealers but your tapes and other supplies as well.

Principle #3: Have dedicated relationships for your supplies and products

The value of having dedicated connections for your supplies and products is that you understand your cost, shipping times, and distribution times -- all of which contribute to managing your inventory.

By purchasing from the same sources every time, we can:

• Buy in bulk
• Understand our cost
• Save time on the road -- not running around to gather supplies or find what we need.
• Stay organized. Because we have a reliable source, we use the same items regularly, which makes it easier to stay organized on the truck and warehouse, ultimately helping your inventory management.

There's nothing worse than ending up with random leftovers. These become supplies you can't use but end up storing, directly linked to the physical storage space we discussed in principle 2.

Some of your dedicated relationships include:

• Your primary product supplier
• A local paint and/or hardware store
• Big box stores like Sam's Club or Costco (this is where we buy our shop rags and misc. supplies)

Principle #4: Book business in the future

You don't want to wait until days before the project starts and scramble to get what you need. Booking business weeks (even months) out will give you the appropriate amount of time to order supplies.

Don't be afraid to schedule jobs in the future. We successfully schedule two to three jobs a week up to 60-90 days out.

You can anticipate your supply needs when you are scheduled out like this. You can time your inventory better, so you don't have too much or too little on hand.

But don't forget Principle #1.

I don't keep inventory based on the job, I use the min/max for our preferred systems, and then I will exceed my max if I've sold a bigger job in the future.

Here's another quick pro tip. Understand the pricing of your system. Your deposit should cover most of your product cost so that you can order your materials when you get your deposit in hand. 

BONUS: HOW TO HANDLE DISPOSABLE VS. CONSUMABLE SUPPLIES

As promised, here's a quick bonus discussion on how to handle disposable and consumable supplies in your inventory for a simple boost to your profits you may be overlooking.

Disposable items are one-time-use items. 

Consumables can be used over and over but have a shorter life span.

I've seen guys (including my crew from time to time) confuse the two.

Sometimes consumable tools are not properly cared for and only get one use out of them when they should last several jobs.

Sometimes disposable items are treated like consumables, and you spend more time trying to clean them to use them again than they are worth.

For example, we use a 2-quart mixing bucket that costs us $0.62 per bucket. Cleaning that bucket may take 1/2 gallon of solvent at $20 a gallon. That would be a loss of $2,000 over a year. In this case, use the bucket once and throw it away.

Conversely, a magic trowel is consumable, meaning it doesn't last forever. But you should be able to use this tool on more than one job if it is maintained, cleaned, and stored properly. A magic trowel is $25 - we can usually get 3-5 projects out of this one tool before the ends start to fray, and it doesn't leave good clean swipes. That's a $100 savings by just taking care of it. That could be a couple of thousand dollars in net profit over a year on that one tool.

Consider this across the board of all of your consumable materials and tools and boost your profits.

So there you have it.

We've suggested four principles of inventory management to help you maximize your net profit and have peace of mind, AND pointed the way toward instant savings by properly treating your inventory's consumable vs. disposable elements.