Keeping It "Just Right"

I read an article in the Birmingham Business Journal recently where the control of company inventory was compared to Goldilocks’ evaluation of the three bears’ porridge. If you have too little, your customers will disappear. If you have too much, your profits will vanish. The objective is to keep it “just right.” I thought it was a rather accurate analogy.

In this tough economy, it is crucial for business owners to prevent profit drain and control costs. Considering inventory mismanagement remains one of the most common causes of company decline, it is a business aspect that electrical contractors need to pay more attention to these days. You either control your inventory or you lose it, and that affects your bottom line. It’s important to operate to a profit, so re-examining your operations in-depth and searching for ways to work more efficiently would be a move in the right direction.

Many contractors consider inventory management to be simple, but why can it be so difficult and expensive to control at times? One reason is that many details are overlooked, such as shelf-life tracking, cost of goods, actual flow of inventory, product obsolescence and so on. Though inventory is an asset, too much of it at hand can tie up cash and create unnecessary overhead costs.

What are the ideal maximum and minimum inventory levels for increased contractor profitability? NECA’s ELECTRI'21 is funding a major research project on the topic to be published within the next year. Contractors have the opportunity to join a task force to contribute ideas and recommendations on the subject—anyone is eligible to join and enrich the project’s content. The final product will eventually be available via the NECA order desk and on the ELECTRI'21 Web site at

Our issue this month is packed with features that will provide you with a better look at managing your business, starting with our inventory control cover story by Claire Swedberg (page 28). Can software systems help monitor the flow of your inventory? What are some available options? Moving further, Lee Chichester examines how the contractor can benefit from partnering with their distributor and how material-handling costs can be controlled (page 40). Do you have problems keeping track of company-owned tools? Take a look at Jeff Griffin’s “Tool Management Solutions” piece on page 54 to discover possible ways to resolve them.

All in all, there are many options you can pursue to help prevent profit drain. Hope this issue helps you discover and implement a few of them. EC



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