Controlling Inventory, Pushing Productivity

May 8, 2006
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This picture shows the contents of the bins contractor Vince DiFilippo uses.
SAN JOSE, Calif. - When 98 percent of all your service calls are successfully completed on the first visit, you must be doing something right. When your company can install a complete heating system, air conditioning unit and coil, air cleaner, and thermostat in six hours with only two employees - again, that's something to emulate.

And, in this case, Vince DiFilippo was not ashamed to tell how his company is capable of doing all of the above - and more. In his seminar, titled "Inventory and Productivity ... Controlling the Beasts!", presented at the 2006 Air Conditioning Contractors of America (ACCA) Convention, the owner of DiFilippo's Service Co. (Paoli, Pa.) provided some valuable tips on managing, as he termed them, "the big two."

"I'm very proud of that," said DiFilippo, referring to his 98 percent first-call success rate. "It took us many years to get to that point. That's very important, because if I can get that call done, that service tech is now available to do more calls.

"Mrs. Jones is happy, because I fixed her heater or air conditioner on the same day. I'm happy, because productivity soars. We get our money and - boom! - we're on to the next one."

GATHER PARTS INFORMATION

In order to master inventory, DiFilippo pointed to three key factors: information, logistics, and discipline. "All three are important," he said. "It's like a three-legged stool. You take away one, the whole concept is going to fail. It took us years to develop this."

Before spilling out all of the specifics to his contractor crowd, DiFilippo noted that he was not a large company, having 11 employees. "This might not work for you," he cautioned the larger owners, before quickly adding, "But, you might be able to extrapolate some ideas here and there to help you with your business."

In regard to inventory information, one of his first commandments is for contractors to know the equipment he/she sells and services. No. 2 is to make sure one gathers information regarding parts from techs, computer, and distributor. "The techs are on the street. They are going to know what parts they do not have, what parts they have to run for, what parts fail, and, often, what parts don't," said the Trane dealer. "So, use those guys and gals. They are great assets.

"The computer will tell you the history. For instance, how many half-horse power, three-speed indoor blower motors did you replace last year? ... All of that information you need to start to gather."

In DiFilippo's case, his local distributor is able to print out all of the parts his company used in a year and in what month. At the same time, he said the local distributor can provide information on the reliability of parts. Also be aware, he said, if the part is OEM- or distributor-available.

"If it is original manufacturer availability only, you have to take that into consideration. If that board you can only get from Lennox, or if that board you can only get from York, or Carrier or whoever, how long will it take you to get that? That plays an important part. If it takes you three or four days to get that part, you had better have one in your inventory."

In addition to knowing how often one sells certain parts, DiFilippo recommended keeping in stock, as he put it, "superstar parts." These parts are flexible and can be used for many applications. For instance, included on his superstar list are four Rescue motors, which "cover everything. It's a beautiful thing. It is one part that will cover several applications."

Contractor Vince DiFilippo said he learned a few tricks from the TV show “Trading Spaces.” He noticed that when anything was brought out of a trailer on the show, it was brought out on wheels. It’s why he invested in some wheeled carts.

LOGISTICS AND DISCIPLINE

Based on the information gathered, this will determine how many of each item a technician needs to carry on his/her truck, said DiFilippo. Running for parts, he said, "is just stupid."

"Have the stuff on the truck," he stressed. "Your service tech is going to love that. He's going to be the hero. We can go to Mrs. Jones, open up our flat-rate book, and say you need this control and this is how much it is going to cost you. She'll ask, ‘OK, when can you do it?' You can say, ‘I have the part in my truck, Mrs. Jones.' ... You can bet she's going to tell her neighbors about your service."

DiFilippo also stressed the need to have reserve components. History, he said, should determine the necessary parts one should have on reserve.

In the end, inventory control is necessary for both trucks and in the shop, he said. Via slides, DiFilippo showed his inventory process, where every part is labeled, identified, and marked. "Everything is organized," he said. "It is in alphabetical order. Plus, it sends a signal to our techs that we are spending time to have things nice, neat, and clean. And, it works. It sends a positive signal to everybody. If a client or manufacturer walks in and sees that, you know they'll say, ‘This guy has his act together.' It sends a very powerful message."

To make the inventory process work, DiFilippo said discipline is required from all parties. This means techs need to replenish truck stocks every day, he stressed. It also means creating a maximum-minimum inventory book, performing a physical truck inspection every so often, and reviewing inventory each year, adding or deleting items as needed or not needed.

"Do not stock ancient parts," was his final suggestion.

Thanks to wheeled carts, loading the “out box” onto the truck is rather easy, said contractor Vince DiFilippo.

ROLLING BOXES

In order to be productive on the installation side, DiFilippo said it is necessary to have a set standard in that department, too. Due, in part, to a recent separation break from his former business partner, DiFilippo said his company, which had been a residential service-only business for years, found itself being "forced" to do installations, too, in order to compete with the competition. Even though his contracting business had limited manpower, infrastructure, and time, he said he had to find a way to do installs faster and better than the competition.

"We knew how to do service," he said. "Now we needed to transfer the good we were doing on the service side, into the installation side. And, I was not going to bow down to be a ‘Buttcrack Bubba.' They [Installations] were going to be right or I wasn't going to do them. ... If we did phenomenal service, why were we going to be chintzy on installations?"

To ensure productivity, DiFilippo said he makes sure to get "every inch of detail" while at the home, everything from taking digital photos at the jobsite to performing Manual J loads to "measuring everything." He then preps the necessary equipment at the shop, to make sure all is running correctly before it is trucked to the customer.

"If it is scratched or dented, by all means call the distributor and tell them to bring another one out," he said. "You've got the time. You are not doing this at the last minute. You are not trucking this all the way to Mrs. Jones' basement only to find out it doesn't work. You do it ahead of time."

DiFilippo said he learned a few tricks from the popular television show "Trading Spaces." On that show, he noticed that whenever anything was brought out of a trailer to a home, it was brought out on wheels.

"In 15 minutes, they are rocking and ready to roll," said DiFilippo. "I said, ‘That's what I want.' "

In a nutshell, DiFilippo created some "job boxes" on wheels, one for bringing inside the home and one for use outside the home. Contained in each box are the necessary tools and equipment needed for an installation. By having two boxes, a technician outside does not have to waste time getting tools from the technician inside. "Everything is there," said DiFilippo. "It may be expensive, but look at the time savings. This is how you do it fast."

Publication date: 05/08/2006

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