45 min read
Watch Fergus founder, Dan Pollard, share his story of how his 19 person plumbing business got through the 2011 recession by developing new...
In this webinar, Dan covers the four fundamentals of stock management: Be ruthless, be proactive, be vigilant and be honest
Right good morning. Cubans coming in school gave her a few minutes to come in. It's going to be a full on hour as always. So hopefully you can see the screen. This one's about a stock control. I've given this speech many, many times. And I guarantee that for some of you, it's going to ruffle a lot of feathers. So I would ask that you can just lay aside all of your expectations around what you know and what you want and what you want and how you would like it to be. I would just ask that you just listen with an open or really open mind about changing the way you think about stock until you get a few minutes, we're going to delighted. So it's still climbing. So we'll just wait. I'm not sure who is on. But if you don't know me or just when we start with who am I just what are the new people on Dan pohlad trading for a long time and friend of figure software. You know, I've been through the ups and Downs went through a couple of businesses and my last business. I got 20 Flagstaff in sell that in difficult full time now. So I'm well qualified to talk about how to manage a stock and your lines are muted just so it's not chatter but there is a Cuban I and I will answer those questions as we go through and talk is really hard. So do ask me all the hard questions and bite bite at once. So they fled to the top. We just see this sort of leveling off now. To give you some background about stock slide 25 staff right. It said 17 vehicles on the road. I also had a branch on why he islands and for those Australians that's about a 40 minute ferry ride from Auckland. There was also was no plumbing supply on the islands only like a Bunnings place makers. And it was very dear to bypass. So we had a delivery going every two weeks to restock. So that's about as difficult as it gets to manage. And when we talk about it how we did it very successfully. Right So the plumbing business was we were many a lot of maintenance and a lot of maintenance our new housing not much money for me. But we still did renovations and big drainage jobs in remote office. So I've done it all in terms of Stop and Shop and had to work through systems and processes to make it work. So to give me the context we're adding 6,000 actual jobs a year. There's a lot of moving jobs to try and manage and keep control. All right. So it's living off now. Good Right. So it will be the full hour as always probably even run over with questions, please to ask lots of questions. Because it's difficult topic now was when my nights all right one night said the wrong time. Right now if you've attended quite a few of these you know I always like to start with them first principles foundations of all the topics on how I begin things since I would do that. I'm also a believer that there are not many things on life that a black and white life is mostly gray is a lot of nuance and I often say life is like a six sided dice and you can understand all sides of the dice right to truly understand something. Stock control isn't one of those cases. There is only one proven system that actually works and that everything every single production Process Company has adopted this one approach to stock control. Somebody's going to put it. It's called just in time or lean manufacturing, I'm going to stop with talking about that because that's the condition of all my stock control thinking what the condition of my trade business. It's the foundation of why we would be successful. Because I adopted these processes and everything you talks you talk to who adopts these processes realise it's the only way. Now, it's very important to talk about. I think the theory of stock control versus the practicality or stock control. What I know in theory, you buy something in, you should better trace it. I know in theory, that's less the reality. But in practicality it's impossible. So you talk to anyone who's actually got stock control systems properly proper digital systems in place of the trade business. They will all tell you it doesn't work. And the reason it doesn't work. This is based on the theory of chaos and it's also like that under me you play chess what with all of us can predict one or two moves they hit right. We can move the point out into the rock and come out of whatever it is almost impossible to predict three or four, 5 moves ahead. You integrate massive territory because the amount of complication and moving parts becomes unmanageable and we need to manage. So it's the same with Boyd. So you've got five trainees and doing three jobs a day. So that's fit green jobs at night. It's 75 jobs. They're all buying with two girls that materials can be left on jobs can go to other vans can go can be looked under a house can fall, I can go back and workshop collect the supplies, and we want to try triesman barely into the time, they are not going to transfer materials between the stock control system and veins and jobs and other jobs in the warehouse it's just not going to happen. And so any system that is reliant upon that much information menu information is going to file into those white files. And so it is possible in the future. This will be solved with RFID technology in order tracking, but at the moment is nothing on the horizon for that to come into the trades and stream maybe in 10, 15 years. It will. But moment this not going to happen. So the only system that they've proven to work for our industries is what's called just in time or lean manufacturing. And what that means is you only have the access on order resistance as you need them. And so the really good example of this is Del computers who are massive in the early 2000s. It's important to talk about this not just a cool story. So Del you know pioneered custom computers that are really, really low price at the lowest price. And this is how they did it. So they built these massive warehouses to assemble the computers right. Massive white stuff that we can conceive now in those areas. They had yellow areas taped off. Some areas were vague like maybe 19 between some of the bigger, smaller, but these are areas inside the production processes was it. There was a conveyor belt going past the end of the assembly line. Now those yellow areas the suppliers of components re-entered that slice of Del wanted to get into the factory you to the heat at least the spy. And in this space. You can do inventory for the part of Del would require for the computers. And then when the order came for the part it would come to this little business inside the Del factory. They print it out and put the order with the barcode onto the can buy it outside the system. And at that moment. That is when the invoice from the supplier to deal with seat. So this is properly manufactured just in time stock management. So let me Del was not carrying any stock for more than a few minutes before it was installed in a computer. Now, you think about that. That is just an incredibly smart sophisticated way to manage your supply chain Del didn't have to carry any stock whatsoever. And they only paid for it at the exact moment the customer had ordered it. So as soon as the customer order at that price was the customers paid for it that order was released to the supplier of the purchase at the site, it was the chip the chip manufacturer got the order immediately on a production line. Scaling and then it was sent out just in time on the conveyor belt to doing other parts to get made immediately to get shipped within this in the day. And he's think about that. And that is just in tradable the other guy story is Tim cook. So Tim cook was the operations guy CEO at apple for many, many years. And you can read the story about his claim to fame. So when he first came into apple 20 years ago whenever it was they had six months worth of inventory supply and apple coming back. How many billions of dollars worth of just products they had tied up in manufacturing and shelves and warehouses and production and did it other than his claim to fame is that he would use that down. He would use that. He said he would use apple stock down to six hours. You think about that six hours now in order to do that apple put the systems, all the way through the supply chain that put these systems they put that all the way through to the mining companies for a site that wanted a special cable. The theme on all this official stuff they required. They put the prices ordering system right through their whole supply chain. And then they put in the future algorithms to protect buying buying cycles. So that they had they had these systems. So funny. And they also have the same system as delta that by retail spikes in the manufacturing processes the suppliers, the parts that they were able to reduce their supply chain down to six hours for that the home. I mean, it's hard to believe that people can be that overnight. And the other thing you have to think about is also Amazon. So this supply chain management is just unbelievable. And we love it. So we love it because they've driven price down because I've driven the efficiency of all of manufacturing out boxes. And I was out of a supply chain that I just they couldn't just driving out cost the whole time three systems and prices. So that is what I base my business on. So this talk is about how can we get a trade business as close as possible to like a Del or an apple. How can we get health systems as late as possible. And there is only one method. So you see my do these other things. And they have all these excuses of what works. I want you to leave all that on the table. She puts it out the door and leave it behind and come afresh with a new way of thinking. It's also going to be really challenging. Right OK. So this is the first set of principles. Just put some slice through this is me looking. Yeah looking old Jesus. So the full principles of stock that is ruthless. Be proactive. Be vigilant be honest say ruthless means. I want you to start thinking, how can I start making my business like $1 in an apple. This is how ruthless. You need to stop being. Being proactive means you actually have to always be in front line. Being vigilant is means you can monitor and check and being honest means you. That means not ripping off customers and suppliers means. So let's go through these four steps one by one. And then we will go through some practical examples of how you bring it together. And then the real life. So these are the principles and then opening through practical examples. These are actual questions to. Yeah I will study if I can. So be ruthless. They stopped being so. As soon as you buy something think you owe a debt. And that's the issue. So this is the number one thing as well. What lean manufacturing and just in time is all about. It's not in curing a debt. So if this principle is on ruthless is how can I not buy patience. Second principle is if I must buy how can I buy the absolute minimum amount so that my debt is the smallest it can be. And the third principle is how can I buy it as close to the point as when I need it rights of debts. Those are the first three points in being ruthless and you must always keep that always in your mind about how you're developing your procedures and how give you the stock is how can I not buy. How can buy. How can I buy the minimum. And how can I buy as close to the point is when I need it right. Those are the cool things you must always keep in mind will still control the fisherman's or stock controllers don't stock however that's not practical for us. We have to stop. We can't seem out the jobs with no stock. That's not practical. So how do we keep that vein stock to an absolute minimum and track and trace everything we buy and get it as close as possible to these principles. So at the end of that cryptic example as hell can we do that. But keep in mind these three core principles on one thing ruthless point not being with us is forget about book length and discounts waste of time. Big manufacturing doesn't do it because they know the cost of handling storage damage shrinkage. Just like an H why all the savings that was possible. And all we did was cause your yourself cash flow problems in handling problems. Now for those few you another would shrinkage shrinkage is the Knights Templar theft from staff because you can't catch him. But you know what's going on. So it's called shrinkage shrinkage in the industry is massive. If you think you stop on stealing from you sorry you think stocks shrinkage isn't occurring you're wrong. It's shown that shrinkage from stock can be 10% at a minimum as high as 20% although I think UBI just ends up in your staff's pockets for their private jobs. It's just the reality. So you've got to put in prices as they reset to minimize that behavior. Right So forget about bulk billing and discounts and stuff forget it based on. It's not with it. It's not worth the hassle. And also, if it's how much you actually save. And if you think about it. You're going to plants and cable pipe and fittings. You've really got the prices at the lowest points anyway right. You don't really need another couple of percentage off. Well, the hassle of trying to store it maintain it count it. Must not withdraw. Right second point is you want to be ruthless in trying to draw down the cost to your customers into the business. So when you think about Amazon and think of it. Why I love them. It's because you buy stuff cheap. And so I want you to think about you want your customers to love you so that I repeat and refer you again. Right and you do that by driving down the cost into drag down the cost a huge component is not over buying to the customers don't know what they build. Right So you're thinking, how can I keep driving the cost down. So a good example. Adam I'll come to all these good questions to the teams right. So a good example is I actually did a Waterman actually just a few weeks ago. And it actually didn't do it for free. And I thought I should maybe sort of 40 bucks and parts for the woman in Sunday night. So which the floors what the stuff. And she adopted too much topic came through like 600 bucks. So we took the docket. And they charge me for two pools of water mains and I think she bought it. She put a lot a lot of extra parts. But you know it was just for free. And I was good. And always so between the parts and creative for materials and sure enough, she came up to 320. So then I just charged her the customer and just call since we imagine the part something that all came 600 bucks or something wasn't a big deal right. So for her, it was great. Good price. I still made a bit of money. But I mentioned, if I had a just child to the 600 bucks part plus the margin there would have been sort of probably $900 plus labor would've been $1,200. So there would be double, which is a lot of money. Well, that customer. And so yeah, I got to make more money. You know what I had all those extra parts and stopped one around. But it wasn't honest with fee or right. It also showed a lack of really cool systems and processes in place. And so by doing the right thing the customer got allowable. And of course, she will she will repeat and refer. And that's the name of the game as you will always make more money with 25 staff than with five star like you've got no idea how much cash will drop out when you've got 25 staff working well as opposed to five staff. Is this stress and challenges, but it's definitely better to have more staff working well than they stop right. And so the cool thing where are the cool ways you grow your business is by actually giving the customers could lower value as they still charge them well, they chosen the lowest that you could make imagine you didn't rip them off. Right So that's another big component of that stock control and growing a business is that you go to go for turnover not always profit. Right So how to make a turnover is just looking after your customers and giving them the beast barely Joe at the lowest cost. You can whilst maintaining a margin there. That's really how you stop growing the foundations of a successful business. Right So being ruthless who is responsible right. The second one is being proactive in this is hard. I'm not going to lie or sugarcoat it. It's just not in the business needs to get into that into the habit of ordering materials before you need it, which means you have to quit the jobs accurately which means you to the site visits the whites do them properly. Get them out and order materials. And this means you have to be up at night quoting and ordering. And it's one of the things you have to do and you get the blow up and get the guys to do it not the jobs. Some will some won't. But it ain't that I could put in prices in place so that it happens. And I've been there. And I get it growing away from one's from just not myself. There's 1 to 25 stocks that I know I know it's grinding but what choice do you have. And I think it's always the mindset right. So the choice that you have to make is this. You can do the work. Now, you can do the work later, but there's always work to do. So if you think about it like this way. I was always like saying you get the most locked up in the book. Well, you can try to do the right. So if you do the work for change. Right So you've done that quite accurately. You've ordered materials not before material need to add up to site resistance as you need. You haven't bought the tracing is not wasting time on the roads like the emergency materials used on the job working right. They say you don't do that. Let's say the trace patient goes to the job in the morning stuck in traffic, you lose losing job. So you're losing out on the job already. He's either buying that material is then left on site lost in the vein not use needs credit. Who knows what happens to you're still doing work. You just don't look after the business. That's called being reactive and humans are just great at being reactive. Very few of us are good at being proactive. And so this will be processes and policies and people needed to be put in place to be proactive and stock stock controller requires being proactive. But it's really hard not going to lie about it. It's hard to get proactive. But you must you must if you want to get your profit up. It's when your job's a job. Come on Tom, you must learn to get proactive and that systems and people. And what I mean, people were it often means you might get an additional person in part time to help you with your ordering and control. You got you but that was then money on a person on a slide were you sticks right here. We got this one. So this is a really, really important slide to talk about this is that. So you may think that an office person is another cost. So you might not be a person full on what you might find. You don't need some sort of part time a few hours a day maybe three hours a week to start taking over ordering right. And this is where we have to start acknowledging that the world is not perfect. And that life doesn't go that way we would like it to go. That's just the reality of it. Right So in a perfect world, you would order the exact quantity of materials you need and then attempt to store it in the closet do the work. And that would be perfect. Where do you ever bought materials sold to find another job. And it would be perfect. This fairy tale laid fairy tale lane doesn't exist. And this is part of why it breaks down. So supplies pick up stuff in boxes a team because it's the truth a number 10 is the number bags a teen box is a team. That's the way it goes right. So let's look at this. So there is this danger sort of quite with his pal points a windex or whatever doesn't matter the quantity was 23 that you quoted to win the job accurately. Right So you can follow it through course was nine sale price whatever important. But as you had you had a profit margin of $59 and $0.80 if you bought 23 of them. Right it's very important. Now, the trading goes to the suppliers and he goes, I probably to get three boxes. I reckon from experience on the same. I need about two boxes of windex and you know the deal buys 30 now go over the pink column. And you can now say you've lost 320 now say on that quote those 20 seriously, did the same thing when 20 screws. The entire job has lost money before you've even started the job. And you might say to me are you. But their stock is in the van and I'll use it on other jobs. How they stock. We know at least 20% of it will know will be taken by your stock for private jobs. The other stuff gets lost. Damage gets used in other jobs not charged yet who knows where it goes. And you do not run or grow a business on hope and luck. That's just nonsense to think like that. What needs to happen is you just needed to order the 23 PowerPoints the night before. That's just the deal. And so what that means is you get the double whammy right. You haven't overbought. That also means you tradesperson is on site working immediately putting the materials in, which is what you want. So if you get to pay a person $25 an hour and they came into two hours a day 50 bucks a day to do all the ordering for the next day and say, you had three guys you've now saved an hour a day in the morning from one of those jobs. Right So the same kind of 40 bucks you've now saved 120 we've saved 120 dollars painting labor. If it is you've now saved $70 on efficiency and you saved over buying on parts. So you she may spend $50 on wages, but the efficiency in your savings will run into the hundreds and that is why you go to operational control. You gotta be proactive and it will generally require a human to do it. This you're going to do it yourself. And they do it every night. I think it's grinding and wear you out. So it's the efforts that you must put a price. Yes in to be proactive and one that won't grind you into the ground and you really don't want to get into the habit of buying stuff. We are indeed that you have to find in chasing work it all out. So do the work up front that's being called being proactive to people see. Third one is being vigilant and this is just being you just have to be honest, when people have good knowing no one wakes up in the morning, it's like one of my staff. No, I don't think I've ever employed someone who woke up in the morning and said, I'm going to just steal stuff from dean chance to have a go at him just to wind him up. People those people I'm sure they exist but they're very, very rare. I don't know if any one. But do they get up in the morning go, oh, look good job. This week, you could it make some money. And I want to want to go on holiday want to buy that boy that affects the car Yeah I'll just take some of that stuff. So I can make some more money. Absolutely They do absolutely. And people are people that good that people are kind of will always mostly quantity is the lowest. If it in if it means metros get left on site. So be it that music get shot back in the workshop in Soviet and that's what's going to happen. So you have to be vigilant about bringing in prices that sort of counter the default nature of people, which is to be kind of lazy and self-centered. I mean, don't be grumpy about it. It's just the way it is. It's fine. But putting in prices that are there to mitigate the worst of those natural human behaviors. And so the two things you must do is you must you must check the invoices from the suppliers right. No chicken. You've got to make sure that the suppliers aren't charging you 100 rather than 10. They can happen. I'm sure you've checked your invoices and say you've seen you know 80 90 that eight. It's easy for them to just accidentally double a figure. And we don't check it's easy. So you could do that. And you will send a check that will try treasonable is reasonable because once they start knowing what you're what you're buying is being charged they'll start sort of like applying for jobs thing like like. So you just stop checking what is bought. Make sure it is reasonable. Supplies on extending overcharging and your very successful business checks every invoice. That's just the way it is right. Don't do it yourself. Just keep a small and growing it. All right. You know the folks, let's be honest. You know what I put this on. You may say and it's pretty important actually. And it's play it straight with the merchants. Right I mean a place right. So when they overcharging you get the credit. It's fair enough right. But when they under charge you also tell them because it's fear known as and then if you don't do this, you'll be surprised at the Goodwill that that will generate because finally, the dealing of somebody is not ripping them off and they love it. And when you establish a pattern of honesty then you establish some credibility and goodwill and they will start going out of their way to look after you. And this is important for later on because when you want to start getting lots of good a raise and lots of credits you won't need to be a really good pattern of goodwill. The other good thing is when you're really honest with them all the time and credits and undermine when you've bought so when you've been on a short story they know that you're straight because helping is that you get a delivery and something's broken scratched or damaged. And you know it was in transit and I have to grudgingly accept that the grumpy. But if you established a pattern of honesty then that would indicate that you're being honest and that need to be robust to break it. And there's no it isn't problems. I mean, just goes back what is really good with the suppliers when you're honest with them, and they can trust you. It also shows to your staff that you're honest and this is very important because this is the start of changing culture and values in a frame because if you start demonstrating you're honest with the suppliers. They will start feeling the impact of when they're taking stuff from your gains for their private jobs. Like all. That's not how we behave in this place. Because you want this social pressure of honesty to start coming and say, you to start living it and sharing it with the suppliers and with the customers like the staff know that you working the customers often overcharging the customer is not being fair. Well, that will leaks that will leak through to them and they feel that they're justified at doing it because you're doing it. So honesty is actually a very, very important component of stock control because to stop shrinkage they have to see that you're leading the honesty because even no one likes to feel bad. So if you're being honest and seeing that culture they would that will start to the scene then the in 10 were Maunder and they're stealing from you is not right. So if they see you living it. That's when they will start living it to. And I also got the feeling you get when you've charged the customer only what you use. And you make money is a good feeling about doing it just right. And so I like that feeling. So nice. So those are your these other foundations right. Those four points right. How we get into it. So be ruthless proactive. Be vigilant be honest. Right these notes to be available for you later on sort of with a glass of water. Right So these are the practical realities. And so let's sort of heavy, heavy bring that to life in the real world. As I mentioned earlier on you the notes in the UK. She can't trace stuff like you can barely get your socks back from the washing. You've got no chance of trying to control materials in your business. Right So based on what you're doing in Pennsylvania don't keep it. There's a good opera. You continue to talk nothing. So I understand you got hit with the counts. You've got to have that stocks. Well but at a minimum. Right So not overstock no understood. Just just enough said Fishman's second one is you need to make have a good arrangement with your main supplier. So whatever it is you tell them that you give them the bulk of your purchases. So 60 70% in return for lots of credits ended of race. So priority right. Because one of the nation's greatest desire from you is what's called share of wallet and being paid on time. That's the main drivers. So if you meet those main drivers in, they would do a lot for you to the things that you need from them from your suppliers. As credits and deliveries. That's what you need for a good stock control system to work. OK So that's a cool foundation. The reason I put this slide up here is this some came from a review of offices in the German offices and after the war of who made the best offices not sure. I go through for all the I think it's kind of self expansion right here. If you think about it, we will meet these people right. The based offices where the intelligent lazy ones know lady didn't mean bein lazy you just mean, they thought about what's the easiest things. What's the least amount of work. I can do to get the job done right. Because a huge part of being lazy is understanding that people are inherently lazy not in a bad way. This is it. Life is full of stress and struggle and the barest minimum we can do is kind of just what we developed because we're just so busy trying to get through normal life. It's hard to really just keep going the extra mile every single time and every single job. So the peace processes are ones that require the most minimal amount of effort and input from people right. That's what being intelligent and lazy means not dumb smart lazy right. That's what we're really after and I take a little bit time to explain the smart lazy system. OK The smart lazy not dumb lazy smart OK. Because we want voluntary low easy systems to comply with. Right voluntary right. Often called willing workers. You want something willingly doing it. You don't want me flogging people like. Now I've given the speech many times in the aha moment will come some will get immediately some will take a few days. But trust me, if you don't get an aha moment you need to keep pondering this bit until you do. It's not often I like this. I'm right. But in this situation, I'm right the system works that assessment system probably just for kind of I was at an event. I was talking to a gentleman. He was in his 60s. He was working at a reasonably large ship building business there. And in construction. He was in charge of all those guys he's been in the trade for like 40 years wasn't senior management. And we were talking about stock control. And I had to dismantle all of his ideas are in stock control and storage and how to do it and all that was going to get half now. And then all of a sudden, I saw the light bulb go on in his head and he did that thing. And he did that thing we went into the thing where he would do that. And he was like, oh my goodness. Oh, my goodness. You're right. I've been doing it wrong for all this time. So you know he'd been doing running his business this way for 20 years, and he hit that epiphany took it took half an arrow hard at talking to one guy before he went, oh my goodness I'll be doing it wrong hope this entire time. So until you get that moment just keep pondering and pondering and pondering this and you go, oh my goodness. So So these are tribunals right. So I've been a treatment was trying to have some photos up here of my band. I had a couple of photos. They're not that though taping was done showing. I've actually been in the game. I know the deal. I saw I know the trade. I don't want to do. Terrific so this party is designed around no data entry or break into charge at working quite a. I got the rules in place is we've had we've had arrangements with the suppliers around the credits and deliveries. Look, we've got a good working relationship really agreeing to pay them by the tween of the month. If they come and do credits and deliveries is a priority for me all the time that that's in place now. And the other condition I've got in place of the trade is what is borders charged right. So this is what you buy is going to be charged to the customer. They only buy what you need. That's the important bit. What you buy is charged. But this is the SmartFit so when they say this is unemployed to charge out work. Right So there's this time materials not quite. It's not quite. OK So when the treaty is at the supplier they must get the delivery docket printed out in Ferguson, the doctor to come over that delivery docket must go in and a plastic bag or the cargo box with the materials they bought for the job. Right I have to stifle or type the delivery docket into the copper box relating to blow out plastic bags not so bad. All right. This delivery docket is the foundation of making an easy system. So they deliver it will turn into a C to be invoice overnight and it will come into focus as they will to pay. Right now, you tell the traders what they don't use leave in the bag or the box and when you are nicks it the merchant or nixed it the workshop drop it back to the said drop the excess parts don't put the cost prospect into vanstone just don't ever do that. I don't want that. So then the merchants say in your annual workshop you have what's called an outwards good beach doesn't it to be big on it going to be taking 100 long or something. And then the trader comes back to the workshop he just goes in his van that the bags and boxes and dumped them on the wood goods box. Well, when he's at the suppliers he just dumps the bag of boxes back at the supplies and then and then the supplies will pick those up from. Because the suppliers are coming to your workshop every day for the reason they pick up the credits they take them back their prices, then will have to drop to the workshop, they price yesterday. Right But at the moment, the price business is not to do any data entry mission does the creative that control automatically into Fergus it's imported when you then import those dockets onto the job. There's the credit, then there's the David. Right So there's the invoice and the credit and the two things add up. He's got to you've got perfect control and you had no data entry requirements and what you've bought is now in charge of the customer. So hang on. So you think about it, all of a sudden you've sold all your stock control groans immediately. And it's a revealing release. It's a very lazy smart system because it works. And so what you must now do is just work on the cultural part, which is that you checking that you're not overcharging the customer because the trader isn't taking kids back and being unreasonable. But this is the habit right. So this is the bit that there's always the struggle. You might end up chasing the customer from your past that you didn't use because the trader didn't make enough notes on the docket. So you didn't created the right parts or whatever happens. But this is your. This is the part, you have to really start working on being honest and working on changing the culture. Because also whilst I really value being honest in trying to charge what I own if what I use. I'm also happy to charge for the value of the service. I provided. So if it means I charge a few more parts or whatever I'm OK with it because if I don't make profits. And I go out of business, then everyone loses. That's not good. So the trick is to change the culture. Step by step day by day. So that drives people start embracing. I'm only going to stop charging the customers what I bought. No, it's not really setting understanding this debit credit system and how easy it is to do this. If they do muck it up. It doesn't matter who has being charged to the customer. That's a very important part of the stock control system. Is that what you're buying is being charged. You try and put all the onus on the trustee to just be honest right. So they sell it. So that part works no data entry should be a red round of applause there isn't. Right the quoted work. Right having misquoted what I want to talk about this, but I said, this is why quite quietly lose money. So on the left is an organized team. So I'm assuming this is quite a job for like a boss from Reno or eligible Reno. Oh big job. No, it doesn't want a two hour job but so on the left hand side is you want the tradespeople site working as long as possible, to be as effective as possible. Because we all know the thing. If you're on site. We'll see the three working most almost get more work done by and than you did the days that weird magic to my right that early morning stop you at the one site working all day never going off site getting materials right. Because if you look at the writing column how most people operate. That's kind of what they lose work because you get supplies picking up materials leaving time and you're either buying materials right. You might want to delay to another job or the bottom right is important right, left inside knowing how is effective work on site effective right hand side 5 and 1/2 hours effective work. Right and so they translate into 100 hours nine hours and also nine days work. No one else effective work means to get the job done and leave in days five hours means 18 days. And this one those quotes don't come in on time labor tools runs out because the ordering right. So that's the important bit. So now. So on the screenshot what I was just trying to show is usually equates. Jennifer I we will come to your question at the end. So being proactive we acquire work is critical right. So if you didn't go to work, you must start ordering materials to the workshop or job site. So the trade person isn't over buying. Well spending time at the suppliers picking materials up. So how do I make there is less iron ore as is possible. So in Fergus we have a favorite build up of materials, what are you going to call it now in the rates on the right hand side. I've got three bathroom free pipe labor fit of the three bathroom pretty pipe in there is the materials list that I wouldn't for a complete three bathroom house. So that's a whole list. That's all the waste in water materials. The 104 150 both junctions windex elbows tees swivels nipples everything I require is a net one section labor's a section in the fit opposite another section right changes fix the system taps a letter onto now the reason it's broken into three just stinks sections. So accurately is that I can quite the house in a couple of minutes and just make one minor variations on links right. Many variations. But the critical part is when it comes to ordering. Because so in Ferguson is the order, purchase order. And you can that you can create disorder. And then you can input sections from a quite so if you structured it quite this way. You've only got to import the section. It's appropriate. So I just cites the as the preload materials and you import those onto the purchase order. It's taken you know, less than 60 seconds, and then using email the p.o. off to the suppliers literalists and military type you only a couple of minutes to do that. If you've done the quite correctly from the first place. So yes, it would take you one evening to build a decent favorite by this light to go to a whole a whole house free bathroom. This will take you a good evening to get it really right. But you know think of the cost implication that as for the rest of your business going forward. That now means every time you do a three bathroom new house you are going to be able to quite actually quite in a couple minutes order in a couple of minutes. That now means you have an overbought means you're not wasting time on labor. Think about the cost savings and efficiency. The ruthlessness that that one favorite has allowed you to achieve in your business. I mean, it's just incredible right. And that is how you get proactive on your quoted work or you could you it quite accurately from the start. Else township 46 minutes. Not bad. OK I'm also, as I said earlier, not going to lie. It's relentless. Getting control of your materials. It's a relentless everyday prices and you gotta embrace it. It's going to become part of how you operate. And so it will probably mean, you might employ some a few hours a day. And if decide in Soviet money grubbing profitable. This is just one of those core areas you have to get under control. The other core areas I receive labor invoicing cash collection. But we talk it another day. I don't talk about this. It's the reason I mention that is look at the bottom of the slide. So this is the area, you have control of in your business. So is a bucket for a reason, right. So the three major leaks in your business are paying wages paint materials and paint overheads right. You only make you only make profit when the holes in your back at a small enough. So the profit from the jobs overfly so materials is it's kind of easy to control. Labor's most like materials is the most difficult thing to control in a Trice business, but it's also it's one, it's probably that major league in a business that Nigel lake. So deflated requires some really, really ruthless processes to be put in place to make that lake as small as possible in your business. And it just you've just got to be ruthless and proactive consistently and it often will require processes and people in place to allow that ruthless protectiveness to happen day in, day out day in, day out. It doesn't wear you cope right. Last little topic is why he on it. So I'm going to give you the practical example of how I managed Waikiki. So there's a property for all of you who live a long way from the supply. I have a second branch. Rural remoteness all of that. All right. I would also like to acknowledge that if this is you business is hard enough as it is those with work remotely from suppliers. I feel your pain. It really is the next layer of complexity is the next level of difficulty. It truly is very difficult. I don't want to minimize that. And it is you know hats off to people who are in the situation. It really is difficult for you. So respectful for those of us who've actually managed to do it. And keep going. It's tough, right. But that's also the way it is. And also luckily these are all solved problems. And with all solve problems the trick is always finding the right mindset approach to approach the problem I've got. So there's the practical reality as well. So it's about touring with its stock. It's physical like it's real. It's tangible and therefore, with all real things you want to control them. They need a place to live. We need a structure. And it's like it's like that You don't leave your car unlocked on random streets at night and come in and find a different way to get home. You drive a car important encouraged market that's rest age you know where it is right. You've got control of it. So you need to bring that same mindset is you've got to you've got to bring order to your stop. You're in control to your stock. And so with that mind set in place. The only approach has been permanent work consistently scalable. Time over time is you must take the stock control side as if it was a separate part of your business. You must treat it as if you were a supplier to your business. So you almost treat you got your trades work here. And Tracy will go to almost as the supplier to get materials from you. And that's the approach you take. And so what that means is in practicality is you need to make a physical controlled environment for your stock. So you kind of need us at a minimum, a full by for a space preferably 4 by 5 as a minimum an actual physical space with four walls. That's actually controlled of the pipe rack and the outside. But the core stock control area is just stock. It's not polluted with office desks and tools and your bikes. No, it's just purely dedicated to stock in the stock control. You need three three little workstations three benches one of them. Is that what good says a free credits and wood goods for deliveries. And then each to prices the stuff that's been put for the Triton with a computer, maybe a couple of computers sit up and photocopy a scanner and fax machine right. You need these practical things needs physical space. And here's how it works. So let's talk about why he can install control right. Very difficult made a delivery every two weeks right. So what was my smart lazy system around that. So what we did is I printed up some A4 bits of paper and two columns and in the two columns it was divided mainly into l commonly use arms because those plumbers and packets. We use the same stuff over and over and over and over again. So they had that built on. Elbows the 40 beans all that sort of stuff. And on the top of the on the top. I just had the date and the job number right. And who bought it and the right people. This is important. I had one goal. I had the key to the workshop break. He would let the people in the few bits and pieces while they pick and they stop the traffic would pick the stock and put it on the counter just like the supplies we do now right. Get them getting a bit of paper and the quantity next to the three-fold items because it's the that's the worst of them right. This all manual is quick and easy, right. With the job number right on the back. They might to put some more stuff if they bought whatever is not on the list. Now straightaway that went into the photocopier scanner and was emailed to the supplier on the mainland right. Right away because what they are allowed to do was that means the office in open because open did the invoicing got the CS the invoice that night for the materials that were bought race race would bag. It was using race race would make it an every two weeks. They would do delivery. So we had to deal with the supplier close to where the ferry was. And they just had a pole and a workshop for us. They just keep putting the bags and the boxes right the dockets and then every two weeks. They would come and do it. They would come and do a delivery and then that would get put on the shelves. But I didn't have to count it because the only way I got it was because it was charged to a job. Now, can you see the simplicity in their system. Super simple. All it required was being vigilant rights and nothing could leave that workshop when it was charred. And the wireless charge. Well, they just had the prices. It was physical beaches right. This just gave that barrier that people just couldn't leave right. They put stuff on the beach was easy did the paperwork was a very easy system. I didn't make the details of data entry to go in and do the purchase order cause I'd hate it right now, I could just get a bit of paper, write the quantities laid on the desk and then crate was scan just press the button scan email office supplies supplies packet delivery. It is all happening by email and I'm but I'm getting the invoice quantities every day to charge the customer supercenter right. That's all it takes. So it's what you have to do, though. Right So is always these problems actually always an internal problem right there will solve problems. It's not that hard to solve it. The issue is bringing about what's called change management and that is incredibly difficult to do. Right So if you have an ad hoc system. And it's all over the show. It's a massive change to bring in new stock control practices. And so this way you get consultants and they went to help. So it's OK that this is a big problem that needs solving and you need help. So unless you've got an iron will. And that being for being in this place because I have that been for like being in its place. I got that in my daddy. I grew up with a place for everything. And everything. This place right fit for me stock controls is kind of easy because I've got it. I've just got that mind that likes it to be really organized but if you don't, you know you're going to need to get some help. And it's right now before you start getting help. You actually have to have some money put aside for stock control. So what that means is you need to be seeing good benefits for your veins. The two with trying to show my mind bankers. I had really good bank. It's a double x and bank. It's with faults flaws vices in the veins that the workers rights of the veins are really organized so it was easy to see when they were getting overstocked and missing. Right see you. You got to put bank. It's an event no question. Good quality bank. It's all divided label like full on hardcore then you need a storage area in your waiters at home where you've got to have kind of ideally 4 by 5 need a space. It's going to have to have the walls a door and got a web camera because you got to put restricted access to an office worker who unlocks it. So again, try to be as an enters they're being monitored. So that they know shit they're going to charge up job like they just can't get it now just can't happen. And for Australia. That's why you had the wave camera. So it activates to your phone. So that you can see when something goes into the trade space knows that you're being monitored right names. That's just the way it works. So the physical things first, and then you need takes you then bring that culture to life right. And so often when you're bringing these big changes in you may need to get some people in short term, but full time. So for example, if you were an ad hoc system right now. And you want to bring these changes in you'd probably want to get someone full time for two or three months on board to help you to make it a reality because you've got the change culture as well as prices is right. You've got to build your favorites. You better start purchase orders you got to check every invoice the tradespeople would start saying, oh hate the boss is checking every invoice that querying what I'm buying and I charge the customers or all get the credits. So therefore someone's short time, but full time is what's needed in office or embittered after 2/3 months, then they can only move to part time that long term right. And then you get that because you want to you want a piece and part time long time to start ordering the materials they before following the credits making sure they aren't overstocked. Making sure just make sure all the processes are being followed all the time right. And then what 57 next song on one time again. Right So I'm going to start answering a few questions. And so now is the right time to start asking me lots of questions. Right So this question is from Adam and c is how would you go about large jobs lately in the little industry. We are having price increases monthly. So you price a few jobs later, a few months later, it starts in May, go on for a year or more. And so potentially some items might be up 20% if not more. OK So Adam this is a very valid question. And that. So there's two there's two components to this. If it's a really large job, then you needed to have locked in and the arrangements with the suppliers on fixed price contracts. So they that the wholesalers normally very good at holding stuff on consignment. So what that means is if it was a very large job. Why not just making this up in a nice package buy lots of cables. You say you're going to need this cable can you buy it and hold it on your shelves right. So yes, you've got to be smart about making sure that the wholesaler has bought the cables and how to on the tracks. And you have to pay that off over x amount of months. But that's the deal right. Well, it's only large commercial contracts, you're in place for. So if that job is going to have a 20% over the course of a year. There's only you there's only probably going to be about 5% of the cost of a job. So what I mean by that is if you do a job. It's like 50-50 between labor materials generally speaking and you. And then you might have at a 40% margin on the job. So that means if something went up by 20% that's about Fox. You know the costs of the actual cost of the job. So if it's a large, large contracts in your team the documents court documents you should have a clause that allows you to pass on consumer consumer index inflation increases over the period of the job. That's a typical part of contracts is a really nitty gritty but that's actually generally what you get to do or not on large contracts if the market is tight and won't allow that, then it's the reality in a recession economy. If you think we're going to bail out and start storing it that is very risky. It's been tried many times. And if you've got the personality. They can absolutely absolutely lock those materials away on a shelf so that no one can touch them then go for it unless you can guarantee it. You're just going to suck up those price rises. So ordinary that the best way to mitigate price rises is in the contract by allowing for inflation. If there's jobs that allow it. You can try and buy the stock and control it, which is unusual, but possible. Steve, you just got a suck it up not the answer you want to hear. Joe what if he needs a balanced thought and don't have time for the credit the country recharging would just be honest. So Joe just be honest. Yeah So my paramount thing was be honest. Say under the delivery docket you've got the retail prices. So just adjust the quantities and just be honest and the credit will come through it will balance out. And that's fine. Right I think this is a more questions. Adam Joe always is a sales cool. It's like David. David's asked me. We're looking at. I tried that great solution to invoice to go. What makes Ferguson was a choice. OK correct question, David. It's understanding the why does something exist. What why. I fear. This is built on the foundations of cash flow and profit because I worked out a long time ago that will help cash flow. You've got nothing. Cash flow is the single most important thing in a business. The next one is, as I put it in cash. You got no profit. So I'd say David, you will find Fergus is probably the best invoicing system available. It is just geared around being easy to invoice because that's all that matters is getting the cash in the door now. Also our customers gripe they put on more staff. And so if you're looking for software that's going to yell out loud grow the focus of the choice for you because our largest customers 120. Start got lots and lots of management 20 or 30 staff. You want to be looking at a platform that's going to allow you to write the worst thing you want to do is be on a platform that runs out of bandwidth in a couple of years time, and you're going to be forced to change over. So that's what it was. It's not money Ferguson's cheap as chips but if you and I mean, the other centers Ferguson Ferguson's businesses. Businesses who want to brag right. You've got complex jobs if you've got a very simple business. You just changing taps and whatever they go for something simple. But if you want something that's kind of hard to grow and fully managed your business, then this is the right choice. But if this is any more questions. What kind of voice like finishing on time. I think is another one. Come in and no oh one more. One more from Jennifer, we put a lot of good from Bunnings this cease fire falls or any at least weekly increase it seems to take longer. Do you have situations that we could manage this waste more frequently admin is stuck with manual data entry more. I don't know where you are Jennifer. But I would just be ruthless I'm not using Bunnings I'm really ruthless on it. I will only use supplies for my bulk purchases that actually have integrations with your job management program like, oh, I know that with money is that going to be just the second take for it to get out of it not us. I would just touch them and find a data kind of supply that's got the right systems to make it work. If that is the case. And it's all PD then you're just going to have to put a person into manually copy the data from the PDF you're stuck in a rural area that's all there is then you have to overcome that limitation with a person preferably not you you just get another probably look at working them for a few hours every day, you can just copy the PD and for you. It's just the only way around the Florence and that's not all surprising to see is the options will Fergus accommodate PD of supply invoices the answer. The answer to that is no there's a technical problem a PD offers a picture display file format. The effort required to get was good. OK our optical character ocr optical character recognition is just a mix. And we went to that is a separate business. And we won't do that. So the option we would say is find the suppliers at UCSB and integrations and put the pressure on them put the pressure on them because the idea is to put the pressure on the suppliers to actually up their game and meet the industry where it's at an industry is going mobile right. It's going data and mobility and emissions need to get up, get on board and the quickest way to a board is if they just lose your wallet speed. And so I would vote with your wallet and move on. Yeah, I see our recognition is not easy technology that's are proven sorry it's a privilege to link and difficult to be consistently accurate. Oh, you're welcome David. I think we may be done. Right all I hoped it was a failure. I would likely encourage you to take time to sink into we get the aha moment. I have just written it as summary ruthless proactive vigilant honest ruthless try to have lots lots of fun try to have training every day my webinars every sort of couple weeks now I have written the books $9 on Kindle on Amazon it can change all these lessons in the written word. So if you want to go over them just read the book over and over. I would encourage you to all think about it with an open mind and go, oh my goodness. And we get the aha moment. So just don't dismiss it. It has worked. It does work. I've proven it even as he gets it gets this big getting guys to the same model. So just think about the aha moment of how you can run a smart lazy system. Smart intelligent like smart ladies must contrast your nice cool with that in mind. Thank you once again. And I hope to speak with you guys a couple weeks like I just.
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