6 Benefits of Construction Inventory Management

March 25, 2024 • 8 min read

This article focuses on the six most notable benefits of construction inventory management, including increased project efficiency and cost savings that lead to higher customer satisfaction.

Construction inventory management at a glance

While every industry requires some sort of inventory system, construction companies often have complex inventory processes that require advanced organization and visibility. This is especially true for construction companies that rent or own high-value machinery; pay upfront for expensive supplies and vulnerable raw materials (e.g., copper wire, lumber); and utilize hundreds of types of inventory across multiple job sites and company trucks. 

With an efficient inventory management system in place, construction companies can:

  • Stay organized and efficient despite numerous projects across multiple job sites.
  • Ensure all supplies, raw materials, tools, and machinery are in the right place at the right time.
  • Rapidly track and update inventory quantities.
  • Plan for upcoming jobs with confidence.

Most construction teams begin to benefit immediately from implementing an optimal construction inventory system.

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Construction inventory management benefits

1. Increased project efficiency

With effective inventory management in place, your construction team can practice ongoing inventory control, which aims to easily meet customer demand while keeping costs as low as possible. This ensures your team has the inventory on hand to complete jobs without overspending on materials. Inventory usage data can help inform when and how much stock to re-order, helping your team perfectly calibrate its inventory levels to keep projects running smoothly.

Optimized inventory management also gives you more visibility into what supplies and materials are left over from completed jobs or in storage. That means you can better determine what inventory is required for a job, then place necessary orders for new supplies and materials at the right time and confidently. This is especially true if your business has determined safety stock levels, economic order quantity, and other key inventory control formulas. 

By optimizing inventory levels, your company can prevent costly overstocking and reduce wastage. This is particularly important in the construction industry, where waste is inherently high, and certain raw materials, supplies, tools, and machinery may be prone to theft, damage, or depreciation.

For example, let’s say a construction company is about to begin construction on a new home. The business also has construction projects underway at 25 other locations in the tri-county area, some nearly finished. If a solid inventory system is in place, the company should be able to quickly identify what supplies and materials can be reallocated from the in-progress jobs before determining what new inventory is required. This prevents overstocking, reduces wastage, and allows a construction company to enjoy better cash flow.

construction inventory and tools hanging on wall

2. Cost savings

As illustrated in the example above, inventory management helps construction professionals control costs and better manage their budgets. This is true not only in the case of preventing overstocking but also avoiding stockouts and rush orders. Both of these events force construction companies to overpay for inventory they could’ve purchased for less from a wholesaler—and also lead to costly delays and disruptions that inflate labor costs. As every construction professional knows all too well, these are expenses that usually come out of the business’s pocket, not the customer’s.

But when effective inventory management has been implemented, the risk of running out of raw materials, realizing the inventory you require is in the wrong location, or having to pay additional fees to get supplies sooner is very much minimized. This is especially true when the inventory management system selected automatically reminds users when stock levels are dwindling.

For example, if your construction company always keeps ten pallets of steel beams on hand, but these materials are spread out amongst dozens of job sites, it can be difficult to ascertain when stock levels are falling too low. Your inventory system should allow you to see not only how many steel beams are at every location or in every company truck, but also regionally or company-wide. Depending on how your company is set up and spread out, you can make informed decisions about when to reorder from your preferred vendor at the right time and at a fair price.

Related: See how this plumbing and heating company uses Sortly for inventory management

3. Improved productivity

As briefly mentioned in the above section, realizing that a particular piece of inventory or machinery is in the wrong place can cause a domino effect of frustrating, costly, and unprofessional delays. But with the right inventory system, you can ascertain where a given pressurized wall dryer, jackhammer, or any other tool is well in advance of when it’s required on a job site.

The right inventory system can streamline workflow and productivity by allowing construction managers to plan out how resources—especially limited ones such as heavy machinery and costly tools—can best be allocated across different job sites at different dates and times. This helps prevent scheduling conflicts that waste precious time and money and threaten your business’s reputation and bottom line. 

Fortunately, up-to-date, accurate inventory data can virtually eliminate these two common challenges.

4. Enhanced project planning

Once again, inventory management data unlocks swifter and more accurate project planning. Inventory data not only allow construction companies to understand what remaining inventory can be utilized for upcoming construction but also provide a robust history of what items get used and which end up untouched.

This information enables invaluable demand forecasting, allowing companies to confidently adjust inventory levels at every job site and in shared storage. This practice doesn’t just save construction companies money upfront but also leads to improved decision-making and risk mitigation.

This is partly because historical data about inventory usage can be combined with current supply chain realities to ensure the hardest-to-get materials are ordered well ahead of time, while those that are readily available are ordered on a more regular basis. 

One of the easiest ways to bring inventory data together with supply chain insights is to simply talk to your suppliers. Your vendors likely have valuable information about volatile pricing, surging demand, and dwindling supply. Talk to them about your upcoming projects and changing needs, and weigh their expertise against your own forecast.

5. Reduced waste and loss

Another benefit of solid inventory management is it minimizes the risk of theft and loss—both on construction sites and in storage. Regardless of where your construction company stores its inventory, many of the tools, supplies, materials, and machinery it relies on to get the job done are high-value investments. By monitoring the movement, value, and use of those assets (including who on your team used them) your business will have unprecedented insight into the history of its most valuable inventory.

Implementing an inventory system that utilizes barcode labels for your team to check equipment and tools “in and out” is the most accurate way to track assets.

Optimizing inventory management also necessitates a more organized approach to physical inventory storage. If a company tracks and manages its inventory on paper or digitally, there is almost always a need to match that organization method physically. Often, construction companies will use this opportunity to review how they store raw materials that are vulnerable to damage and high-value items that are susceptible to theft and correct any poor organizational practices that cause even everyday materials to be misplaced.

Whether investing in tool cribs to keep key items organized together, or finding space in the budget for climate-controlled storage or highly-secured storage facilities, improved inventory management helps construction companies identify vulnerabilities and address them before the consequences affect productivity and profitability.

Inventory management also leads to a more sustainable approach to construction. We all know that construction is one of the most resource-intensive industries around. More and more construction companies want (and feel the pressure) to keep sustainability top of mind. While sourcing more sustainable materials and implementing greener design are invaluable strategies, simply improving logistics to reduce your company’s carbon footprint and utilizing existing inventory more thoughtfully goes a long way. 

Reducing your construction waste is good for your bottom line and better for the planet, and inventory management can help you make more informed, less wasteful decisions.

6. Customer satisfaction

Finally, by leaning on the previous five benefits, construction companies that practice efficient inventory management ensure the timely completion of even the most challenging projects. That’s because these companies have the information they need ahead of time to confidently place complete orders, prepare ahead of time for whatever tasks the construction schedule dictates, practice improved resource scheduling and allocation, and avoid costly delays and disruptions by always having the inventory they need on hand, in the right place, in the right quantities. 

These benefits create a customer satisfaction flywheel that ensures projects are completed on time, at budget, and as specified. This means improved customer satisfaction, a more organized approach to billing, a higher-quality deliverable, and another stellar project to add to your company’s portfolio.

man managing construction inventory on a tablet

In conclusion, efficient inventory management in the construction industry leads to increased project efficiency, cost savings, improved productivity, enhanced project planning, reduced waste and loss, and improved customer satisfaction. By implementing an effective inventory management practice, construction companies become more organized, better understand inventory needs and patterns, and prepare more intelligently for future projects. After all, once a company understands how it uses inventory, what its vulnerabilities are, and where its inventory is at any given time, it’s much easier to focus on what really matters: completing a construction project on time, on budget, as designed, and safely.

How Sortly can help with construction inventory management

If your construction company would benefit from improved inventory management, try Sortly free for 14 days. Sortly lets you organize, track, and manage your inventory—from any device, in any location. Our easy-to-use mobile app lets you and your team update inventory on the job, scan barcodes from your smartphone, set low stock alerts to remind you to re-order, and more. That means you can work more efficiently, plan for jobs better, and serve your customers to their highest satisfaction.

Join the over 20,000 construction professionals who trust Sortly as their inventory management solution and start your trial today.