Cool Tools: Tool Management
Published: November 2010
Tool management systems help electrical contractors monitor the locations of tools and other assets, reduce tool loss, and provide valuable data that help owners and management improve business efficiency and bottom-line financial impact.
Don Kafka, president of ToolWatch, a provider of tool management systems, owned an electrical contracting business for 20 years (www.toolwatch.com).
“In the mid-’80s, I spent hundreds of thousands of dollars to develop the management software necessary to run my contracting business because it was not yet commercially available,” Kafka said. “Today, technology has advanced so far, costs have dropped dramatically and management systems are available for an affordable monthly cost. I cannot imagine running a successful contracting business today without one of these systems.”
QuickPen, another asset management system provider that is known to electrical contractors, was acquired by Trimble Navigation in 2009 (www.trimble.com/construction/trimble-alltrak.aspx).
Rob Miller, product and segment manager for Trimble Building and Construction Division, said the acquisition was driven by the synergy between Trimble and QuickPen product offerings with the AllTrak product being an important and strategic part of that mix. Trimble tool management products now are available under the name Trimble AllTrak asset management systems.
Kafka and Miller answered questions about how electrical contractors can benefit from asset management systems.
Briefly, what are the benefits of computer-based tool tracking and management?
Don Kafka, ToolWatch: An automated tracking and management system can significantly reduce tool loss, improve warehouse and job site productivity, and provide detailed job cost and billing information. They can also improve tool and equipment service operations, which will reduce unscheduled downtime, improve safety reporting and reduce liability exposure.
Rob Miller, Trimble AllTrak: The greatest benefit of a good tool tracking system is its ability to manage and track the location, [the] responsible employee, availability, condition, utilization, and return on investment of any item in the database. The result is reduced overhead cost with increased productivity and efficiency in the warehouse, tool crib and the field.
What are the differences between simple tool tracking programs and true tool and asset management systems?
DK: True tool management systems go far beyond tracking the location of tools and equipment. They provide the critical information necessary to make business decisions that impact an organization’s operational and financial performance.
RM: A tool management system automates the critical processes that a tool or equipment manager follows daily, eliminating steps for him while monitoring and notifying him when intervention is required. It should have enough intelligence to make decisions on what should happen next when an event occurs, such as when a tool goes missing. It should maintain inventory knowledge and provide answers to questions about the inventory, such as what tools are at a specific job or where all of the electric benders are located. It will provide the knowledge about the company’s physical assets that help executives and managers make well-informed decisions.
What does your company’s tool management system include?
DK: Our system is an online service [Software as a System (SaaS)] that includes all of the modules necessary to manage tools, equipment and materials. It also includes the supporting modules such as service and calibration, purchasing and receiving, and job cost and billing.
RM: Our product can be tailored to meet the needs of most construction organizations. Trimble AllTrak Office software includes asset tracking, consumable tracking, quantity asset tracking, asset billing, multiple branch offices, service and maintenance scheduling and tracking, and customizable reports. Customers have a number of optional hardware choices ranging from handheld controller and barcode scanners, tablet PC, and a host of barcode labels available in a variety of sizes and made for several materials.
Briefly, how does your system work?
DK: Tools, equipment and materials are identified and tagged with barcodes, RFID tags or GPS tags. As these items move from the warehouse to job sites or employees, they are scanned and recorded electronically as transactions. These transactions then go on to provide all of the data necessary for job cost and billing, tool management, inventory management, service management, reporting, etc.
RM: Most systems use barcoding for the tool assignment process. A barcode is fixed to a tool, and a barcode scanner is used to scan tools and allocate them to specific jobs and employees. When tools are returned to the warehouse or tool crib, they are scanned back into inventory. Once a scan is complete, a database is automatically updated with the assignment information. This gives the organization accurate data on the current location of their inventory. The database can provide additional information beyond where items are, such as condition, history of use, charges for use of the tool, as well as managing service and maintenance schedules, safety inspections, and calibrations.
Can your system manage larger equipment in addition to tools?
DK: There is a blurred line between “tools” and “equipment,” and each contractor seems to have his own definition. Most tool management systems provide features that enable the user to decide which assets are managed as tools and which are managed as equipment. Air compressors, excavators, power tools, hand shovels and even small drill bits can be managed in one system. The user decides which features are appropriate for each item being managed—for example, using the recurring-service event feature would be appropriate for a gas-driven air compressor but not for a hand shovel.
RM: Equipment can be managed and tracked in most systems. Our general distinction between tools and equipment is that tools are anything without four wheels. However, our system further depicts items by asset families and types. For example, an air compressor is a subset of air tools, and a compact excavator would be a subset of earth moving equipment. These items are assigned to jobs and employees the same way, but information about them is tracked differently.
What investment is required to put your company’s system in place?
DK: The financial investment is very small when subscribing to a service, compared to purchasing all of the software and modules. Our system costs the customer $125 per month per user. They can also purchase mobile scanning devices and subscriptions to support remote field operations. Most of the cost for initiating a system is tied to training and mobile scanning devices. The typical system starts with an annual subscription for one user, a mobile barcode scanner and web training for about $8,000 dollars. We offer two subscription options for ToolWatch Enterprise. The full Enterprise subscription with all software modules is $125 per month; the Pro Enterprise subscription of $100 per month does not include the use of modules for job cost and billing, purchasing and receiving, and service and calibration. Beyond the cost of the subscription, an organization must dedicate personnel to identifying and tagging tools, equipment, materials and learning the new system. These costs are dependent on the size of the organization. However, the return on investment is almost always recouped within six months, whatever the size of the organization.
RM: Our product, Trimble AllTrak, focuses on the needs of medium to large companies. Trimble AllTrak is primarily sold through our distribution partners and as such, specific pricing information is managed through that channel.
Are tracking systems difficult to manage?
DK: No, once the system is in place, it is designed to be as transparent as possible to the warehouse and field operations. As items are scanned and loaded onto trucks, automation in the background is adjusting inventory levels, generating job cost information, billing information, reorder information, etc.
RM: Once implemented, almost all decisions and processes are automated. Very little system maintenance and upkeep is required.
Who provides training?
DK: We provide training via the web, on site, or at our training facility in Denver.
RM: Licensed Trimble AllTrak dealers provide training for the products.
Are programs available for both large and small contractors?
DK: Our system has evolved over the years, and has become a very comprehensive management system used by the world’s largest companies. However, because our subscription service now provides all of the capabilities for $125 per month, even the smallest contractors can enjoy the same software that the largest contractors are using.
RM: There is a variety of tracking systems available to small, medium and large contractors. We believe that any contractor doing $2 million or more in annual revenues with $75,000 or more invested in tools and small equipment should consider a computer-based tracking solution.
How many electrical contractors use tool and asset management programs?
DK: We find that about 50 percent of electrical contractors we talk to are now using a purchased tool tracking system, about 30 percent are using some other form of tracking such as Excel, whiteboards or a “home grown” system, and the remaining 20 percent are not using anything.
RM: I believe the vast majority of contractors today use some form of computerized tool tracking solution. ... In today’s economy, where there is a great deal of financial uncertainly, contractors are definitely paying more attention to their tool budgets and are making a better effort to manage their inventories more effectively.
GRIFFIN, a construction and tools writer from Oklahoma City, can be reached at email@example.com.