Inventory Tracking: The Good, the Bad and the Solution - PODCAST TRANSCRIPT

Editor's note: The following is the transcript of a live interview with Eugene Zukowski from Jobba and Brad Sutter from Sutter Roofing. You can read the interview below, listen to the podcast or watch the video!

Heidi J Ellsworth: Hello, everyone. My name is Heidi Ellsworth and this is Coffee Conversations from Roofers Coffee Shop. We are so excited today to have some great guests who we are going to be talking about inventory tracking. This has become even bigger. It's always been a big deal for every roofing company out there, for every construction company. But in the last year since COVID and the material shortage, it has totally taken a whole new level of importance within the industry. So today we are going to talk about that and we are excited to have all of you join us.

So before we get started, let's do a little housekeeping. This is being recorded and it will be available within the next 24 hours. Please share it, get it to your company, to other roofing professionals, friends and family. This is a great, great conversation to have. And this is a conversation. So we have the chat open. Please let us know who you are, where you're at, what kind of business and company you have  and please feel free to ask questions, make comments all the way through because that's what this is. This is Coffee Conversations. So let's get going.

First of all, I want to say thank you very much to our sponsor, Jobba. Jobba comes up with ideas, their thoughts, really bringing thought leading conversations to Coffee Conversations. We love them as a sponsor and want to say thank you very much for being here today. So let's introduce our guests. So first of all, we have Brad Sutter from Sutter Roofing. I have to tell you, I've known Brad a long time and this is really kind of a monumental day for me to have you on Coffee Conversations, Brad. Thank you for being here.

Brad Sutter: Thanks, Heidi. I appreciate it very much. And I know our history in the Florida and some of the national associates things goes probably longer than either of us would like to admit.

Heidi J Ellsworth: It really, really does. I'm telling you. But it's been so great. In Florida, what a great association you and I have worked on together there for so long.

Brad Sutter: Absolutely.

Heidi J Ellsworth: Could you please introduce yourself and tell us a little bit about Sutter Roofing?

Brad Sutter: Sure, yeah, no, I'm Brad Sutter. I'm executive vice president of Sutter Roofing Company of Florida. We're a family-owned roofing company and as it says in the bio, we've been in business, continuous operation for 122 years. And I've really done, I would say, most facets of the business and just about everything under the roof of a roofing company. So I'm happy to be here and happy to share any insight I can help with today.

Heidi J Ellsworth: Well, congratulations, 122 years is a huge celebration.

Brad Sutter: Thank you.

Heidi J Ellsworth: And a returning guest, one of our favorites also from Jobba. Eugene, thank you so much for being here today and thank you for being the sponsor.

Eugene Zukowski: Guys, thank you so much for having me here. I really appreciate it. And Brad, you look great for 122 years, you're really pulling it off there, buddy. Looking really good for that. So guys, absolutely thank you so much, and love working with Roofers Coffee Shop. And obviously, Brad, thank you for your time and everything. Much appreciated.

Heidi J Ellsworth: Excellent. And again, Eugene, thank you so much. I'm really excited about this conversation. So just a reminder, the chat is open. Good morning, Maureen. She's already put her information in there. Please let us know who you are, where you're from, what kind of company you have and keep that chat going. So today we are talking about inventory management and I have to tell you, we had a great conversation, Eugene and Brad and I, before this Coffee Conversations just prepping. And I walked away and I was just like, "Wow, so much has changed and there's so much to talk about when it comes to inventory management." So let's just kind of start off, gentlemen, let's set some groundwork here. And so Eugene, I'm just going to... Actually, Brad, I want to start with you on just what you consider inventory management and how it plays a role within Sutter Roofing.

Brad Sutter: Yeah, I think for us and for most roofing contractors, the question you're trying to answer is what do we have and where is it? And inventory management is being able to place the materials for each project, whatever you're doing, right place, right time. And also, a big thing for us is trying to manage that inventory stock and to make sure that we're efficiently using what we might've already purchased so that we cannot allow that inventory to swell, keep job costs down, things like that. Be efficient with our material usage.

Heidi J Ellsworth: And that seems like such a simple concept that is not simple at all. Eugene, you work with contractors all over the country who are dealing with inventory management. Can you give us your view on inventory management and how it's affecting roofing companies?

Eugene Zukowski: Yeah, from my biggest input is exactly what is... It's a real blind spot within an organization. Everybody's so focused on a day-to-day, obviously customer service is important and communicating and doing that stuff, I found that inventory is one of those blind spots that everybody kind of knows is a blind spot, but they really don't know what to do about it to resolve it. And they're all trying to figure everything out. And inventory, to me, that's that spot where everyone's like, "Yeah, that would be great to solve," but they always end up putting it on a back burner.

Brad Sutter: It wasn't a big deal, inventory was that afterthought blind spot, wasn't such a big deal until everyone's inventory swelled to three times what it was normally during supply chain. And it's really important to know what you have or don't have when you can't get what you need, when you need it.

Eugene Zukowski: Yeah, that's a really good point is that when things changed, when materials and inventory where everyone's buying what they needed to buy because they had to have it, it was kind of an afterthought. But now as you said, things have changed quite a bit and it's still one of those blank spots I really want to see people trying to solve.

Brad Sutter: Yeah.

Heidi J Ellsworth: Brad, I want to hit on that, what you just said because... And I'm going to take us way back and I know we didn't want to talk about how old we were or how long we've been around, but if we go back to the '90s when I started in the roofing industry, most of the contractors I worked with had pretty substantial warehouses and they had stock in their yard and everything. And then as into the 2000s into 2010, you really just saw this just-in-time concept of, "Well, we don't need to keep that much inventory, we don't even need our big warehouses anymore because we have all of these distributors and manufacturers who are going to get us the products right away." Have you seen that and how has that changed, even before the material shortage, going way back and how that just-in-time inventories kind of really changed the industry?

Brad Sutter: Yeah, absolutely. And I think going back where, again, trying to answer the question, "What do we have?" And it's evolved where people, you walked out and you could kind of see what you had and that was just that. Then people started pen and paper, "Well, here's a list of what we have." And then it became, "Hey, here's an Excel spreadsheet, of what we have of each type of material," whatever. Now you have people that are real-time inventory systems and tracking and barcoding and things that can be automized. It is been a full evolution from simplicity all the way to full automized type of reporting. So technology has definitely come into play here too.

Heidi J Ellsworth: Yeah, and really the material shortage took that just-in-time delivery concept that had built throughout the last 30 years and just turned it upside down.

Brad Sutter: It definitely got turned on its head. Historically a couple of week lead time was pretty standard except for those exceptional or really super high volume jobs. And when a couple of week or three week lead time turned into three months or longer and you couldn't get what you needed, the JIT or just-in-time or drop shipping to a project that went right out the window because you just didn't know when you were going to get it. And if you didn't have what you need when a project was ready to start, well the owner or the contractor might move on to another contractor if you couldn't perform the work. So they were using that force majeure clause to say, "Hey, you can't perform, I'm moving to the next person," even though you might've already had a contract in place. So that inventory management became really important.

Heidi J Ellsworth: Yeah, yeah. So I want to stay on this because really we talked so much about material shortages and how to work with those and stuff, but we just now started to have this conversation about what the ramifications are. And in fact, I've just been at meetings just recently where the industry as a whole is saying, "Well, shipments are down, but the jobs aren't down because there's still so much inventory out there in warehouses that was purchased during the material shortage." So since the material shortage, Brad, I'm going to keep going with you and then Eugene, I want to kind of bring that in, but since the material shortage, how has that changed with what you bought there and now trying to use it, basically drawing down that inventory and how you use it, how you purchase now?

Brad Sutter: Yeah, so it's interesting you mentioned that, Heidi. I was at an industry meeting not too long ago. A lot of the contractors and the panelists at the industry were talking the same thing. The distributors and manufacturers, they saw a dip in business in the first quarter of 2024 and really into 2023 too. "Hey, what happened? The industry's still going strong." Well, what happened is when things returned to some form of normalcy, all the contractors and a lot of distributors too are sitting on all this inventory, so they're not ordering more. We're trying to draw down what we have. And we continue to... I think we're pretty well through that personally with our situation, but I know there are other contractors who are still trying to draw down inventory and use that.

Now, what that meant to us is, during the highest supply chain, we were kind of mixing and matching materials, manufacturers and things and the manufacturer's like, "Okay, that's okay. You can do that now." And then the next week, "Well, now you can't do that anymore." And we said, "Well, hold on. We need a little grace period here. Let's work together. Let us draw our inventory down. We're still going to be installing your products. We need to use our inventory. We need a little cooperation here to work through these inventory issues." And I think for the most part, from what I understand, I'm talking to other contractors in the industry, they're kind of on that same wavelength. They've got some cooperation. And so as we're drawing down inventory, now we're getting back into using like-manufacturers products, accessories, fasteners on projects. That's kind of becoming back into where that's expected and that's what they're going to go with.

Heidi J Ellsworth: Right. Yeah, it really did feel like the industry tried, for the most part, really hard to work together on manufacturing, distribution and contractors bringing it all together through that. Eugene, what are you seeing with contractors across the country on exactly what we're talking about, just-in-time, moving now to maybe this little bit of hybrid? I just don't see people going back 100% to just-in-time deliveries, at least not for a while. It seems like there's going to be a little bit of a combination.

Eugene Zukowski: Yeah, to me, I kind of feel what I'm seeing out there is it's really people are kind of gun shy. I've talked to some contractors, I mean they went from very little storage, the next thing, they own five storage warehouses in a public storage or something just to put their material somewhere because they were so afraid of not having what they needed in order to fulfill the work that they had. And now they're trying to figure out, "Okay, what do I do with this? My public storage bills are getting really high. Do I need to move this somewhere? Do I need to move buildings?" So I see a lot of people still figuring out how to deal with that physical inventory and making sure they can consume it properly and go through it.

But as Brad says, everybody's trying to figure out a way to get back to that normalcy between keeping systems in place and things like that with using the same manufacturer. So I'm seeing people really almost, I wouldn't say losing track of it, but they've got so many buildings and outbuildings and things like that that they never had to deal with before that they're trying to get all that into one place. And then I think maybe they're even looking at buying new buildings for their business because they thought that they would draw that down quickly and get rid of that extra storage. But I don't think they're really experiencing that just yet.

Heidi J Ellsworth: And I want to say, Ryan, thank you so much. He said, "Using it, but we really are pretty steady now with availability of materials we use. We just built a separate building for items we are going to inventory." So Ryan, thank you for sharing that because exactly where we're going. Okay, let's talk about that. Let's talk about, Eugene, you just set the picture so perfect. We have outbuildings, we have all these different places. What's going on, where is everything? And like you said, Brad, it's kind of mismatched. What have you done, Brad, with your inventory system and how have you started really handling getting your arms around it all?

Brad Sutter: Yeah, so prior, we would take inventory, physical inventory, monthly, so you have monthly inventory, but we have really moved to real-time inventory where we use barcodes and we scan in and scan out the materials that are coming in and out of our warehouse, going from the warehouse out to jobs or from completed jobs back in. And so that's allowed us to speed that process a lot more quickly than doing... I mean, we still do a physical count, but the actual transactional type things happen much more quickly on a daily basis. So we've tried to just have more accurate snapshots that are available pretty much real-time or at least they're accurate at least every 24 hour. I would say 24 to 48 hours, we're doing an update. So the technology has made it a lot easier to do that.

Heidi J Ellsworth: Well, and I know we talked about this before a little bit, but when you're bar scanning and scanning and everything that's coming in and going out, you're also recording pricing on those materials. And so, you know if you bought materials a year ago if it was a little bit a different price than it's today and we're always careful, very careful we aren't talking about pricing, but just in managing that and understanding job costing and stuff like that, how does that work with you Brad?

Brad Sutter: Yeah, so we're not quite that sophisticated. We're looking and what we try to do is there are several... I know that I don't want to get in the weeds too much, but there are several different ways to do dollar cost averaging or over time and we're just trying to use a good snapshot of what we're paying and average that out. Or if we know we brought something off a particular job, we'll bring it back at that price. So there are a couple different ways you can do that. I know some people, some contractors for something that's coming back off a job, they bring it in at 75% of value just because there's a portion of it that's on the handling that's already on that job. We could probably talk about that for three or four hours, but like I said, I don't want to get too much in the weeds on that.

Heidi J Ellsworth: Yeah. Well we do have a question. Jason, thank you so much. He asked Brad if you could talk more about the scanning barcode technology that you're using. It sounds like something they might want to implement. So just like a little bit more information on that.

Brad Sutter: Yeah, and we've been on our new inventory system since the start of 2024, and it does use barcodes and the barcodes are attached. We have an internal barcode and we also use the barcode that manufacturer puts on. It can be read either way. So we have built it so that our own internal barcode that we generate, we can put on the shelves, but we can also scan the barcode that's on a box or a bucket or whatever. I know that the most inventory systems that you can, either software as a service where you log in and your inventory's there or something like Jobba, they have barcode capability. I mean the barcode reader you have right now is your phone. So, our inventory, you can log in from your phone and scan something in or if one of our field techs or service tech needs some materials from the shop, they can log in from their phone, they can hit the barcode and transfer it over to their job or their truck and that just gets centralized. So the technology's out there.

Heidi J Ellsworth: Yeah. Well, Eugene, let's talk to Jason's question. What kind of systems are you seeing out there with being able to track, along with obviously we're going to talk more about that with Jobba's, but what are some of those systems?

Eugene Zukowski: Well, a lot of what Brad was saying, the contractors who have implemented something and something along the lines of a barcode scanning or something that's going to be able to communicate inventory quantities between people receiving it and things like that, that's really for the ones who have actually implemented something. But the reality is I haven't seen a lot of implementation across the industry. There's a few contractors I know that, again, have done what Brad's done and had a system built or built a system to be able to track that information. But that's really one of actually the sore spots I see is not a lot of people have much in place. So as far as what's implemented, I would say very little, but ideally something along the lines of what Brad has done with barcodes and the ability to track inventory in and out.

Heidi J Ellsworth: And I think one of the things that really hit everybody was, and maybe before the material shortage, I am not going to say people weren't as concerned about it, but we realized just how valuable a fastener is, how valuable material is and we have seen a lot of material theft that has also gone on both in and outside of companies of when products are dropped. To me that seems, and maybe Eugene you're nodding, on how that really is affecting contractors out there too and why it's making this inventory management even more important?

Eugene Zukowski: Yeah, that's really the thing is they don't really have an idea as to what's walking out the door and what should be coming back from a job. And that's kind of where everyone's kind of really trying to figure out, "Well, how do I handle that?" And then if they're not doing what Brad was doing, for example, where they were doing monthly physical counts, they really had a blind spot when they were going to try and look at this stuff. At the end of the year, they were looking for a variance and they realized they're 20, 30, 40% off and it's kind of late at that point in time to kind of figure out what's happening. But that's really the area is you don't know if it's theft, you don't know if it's underestimating, you don't know if it didn't get charged to a job or not. And it's about trying to figure out how to answer those questions is I think really the concern or the focus where it should be.

Heidi J Ellsworth: Yeah. Brad, what do you see that? I mean overall, can you talk about why this is so important to manage as you're looking at all the different things that are going on out there once you have it?

Brad Sutter: Yeah, absolutely. I mean, contractors are always looking for an edge, something that's going to help them be a little bit better, a little bit more efficient. But one of the things I look at in inventory is cashflow, right? If we are pulling something off of a job that we have already paid for or is about to be paid for and then we transfer it over to another job that it could be used on. So again, visibility, we want to know we have that, we want to know what we have and we want to know when we paid for it. So if it's something that we've already expended the cash on and we use it on the next job, that just means we're not going to have to spend, we're not going to have to buy something or put the money out again to buy the same product.

We've already purchased it at some point in the past, so when we put it out on a new project, it's just a methodology of cashflow management. It helps us. Maybe that project is cashflow positive sooner than it might've been if we had had to buy, whatever, the fasteners, the membrane, the insulation, whatever, a portion of one of those things. It might not make a huge difference, but it does help... You're always working on that inventory management, what you have in stock and what goes to the job, trying to keep that inventory level at an acceptable cost to your company. So we're always trying to move things out of inventory on the jobs. You're always right-sizing and trying to comb your costs see how your jobs are truly performing.

Heidi J Ellsworth: Yeah, we have a great question from Julia. Thank you, Julia. She says, "The barcode system you're using, are you able to note what job or project the materials are being used on?"

Brad Sutter: So, in the system that we use, you can scroll or when you start to put a job number in, if you know the job number, you can start typing the name or the number and it'll kind of populate like most searches do, but it's not an automatic thing. You still have to know one or the other, name or number one way or the other.

Heidi J Ellsworth: Eugene, kind of taking that on, in the Jobba system, how does that work?

Eugene Zukowski: In the Jobba system it's, I don't want to use the word automated, but it's kind of built in to understand where that material, so you can state a job by project. In the field, for example, when you're working through a ticket, Jobba knows to automatically associate that material with that job itself. So as you're using it Jobba's kind of built to just associate the information together, so what job you're working on, what dispatch, what truck, all of that's kind of tied in and automated as part of the process.

Heidi J Ellsworth: And I just brought the screen up to show, and this is kind of exactly what you're talking about right here, right?

Eugene Zukowski: Yeah, so as you can see on this screen, for example, I just pulled up the work order view in the field, a little bit different here, but this is all the material that was used on this particular service ticket, for example. You can see the actual quantity consumed and if this was for a contract, for example, we would have a plan quantity. So we would be able to assume the difference between what was in the budget versus what is getting used in the actual work order. So if we're under using material because we overestimated, which happens, we should be able to easily see what's coming back from that work order should be coming back into the warehouse or at least be available on that truck. And then the same thing, if we're over consuming material, we can at least account for it, so we know to charge a job properly for job costing purposes and all the fun commissions and all that fun stuff. But that gives us the ability to automate it as part of the process.

Heidi J Ellsworth: And I mean, Brad, thank you. Just so everyone knows from our earlier question... Oh, sorry, I'm going to go ahead with Julia on this. She says, "Does Jobba have a built-in inventory management system or would you need to implement a system that integrates with Jobba?"

Eugene Zukowski: No, no, Jobba has a built-in inventory management system. Where we could integrate for you is if you wanted to automatically update your accounting platform. So if you wanted to consume the materials in Jobba, but of course we got to get all that information back to accounting, that's an integration that we could build to backfill all that data into your accounting platform. So the platform itself is already done.

Heidi J Ellsworth: So, I'm going to ask a question that I hope is not too simplistic. But I have just scanned my barcode as the material has come into the warehouse with Brad's system, and then Eugene, how does that information get in?

Eugene Zukowski: So, with that type of a system, we do have a bidirectional API where let's say the warehouse itself is tied to accounting. So you scan the barcode, it's back feeding accounting, that inventory has gone up or go down. With our API, we could then backfill Jobba to say, "The warehouse now has X amount of this material." Then when you go out in the field and you actually do the work, we're going to say, "This material was consumed. It's consumed on this job." So we're going to update the warehouse quantity has been removed, charge it to the job and all of it's synchronized.

Heidi J Ellsworth: Perfect, thank you. Sometimes we need some that simplicity. Go ahead, Brad.

Brad Sutter: That's a really high-level automation. What Eugene just described, from what I see, that's top class type of inventory management where you can have that much automation in there.

Heidi J Ellsworth: Yeah and putting it together. Julie also had a question. Are there only certain counting platforms that integrate with Jobba?

Eugene Zukowski: Well, I like to say it this way. Jobba has an open accounting API. As long as your platform has an open accounting API, we should be able to integrate with them. So there's not really, "We only work with X, Y or Z." It's really a customer by customer basis and it really depends on what platform they're working with the level of integration that we can perform.

Heidi J Ellsworth: And she specifically asked about QuickBooks.

Eugene Zukowski: Well, QuickBooks has a couple of different versions. There's online and there's desktop versions, and each one of those even has different endpoints. But again, if somebody's interested specifically, we can go through the different accounting platforms and verify that the endpoints that we need are available.

Heidi J Ellsworth: Great. I know we're getting a little bit tactical to everybody.

Eugene Zukowski: That's okay. Those are good questions.

Heidi J Ellsworth: But I think that's important. I also wanted to make sure that everyone saw Brad's comment about... Brad, you had said that you guys just did a Google search to find... You've done Google searches.

Brad Sutter: Yeah, we were just looking. Our old system that we were using was very difficult, clunky, hard to manage, didn't give us the reporting that we needed and so we evaluated a lot of different systems. There were a couple that I really liked. We ended up not choosing one of those. But it was pretty cool and very intuitive. You could upload the inventory either on an Excel spreadsheet or a CSV file and you upload it in the system. So basically whatever you had was real-time ready to go and they had an integrated barcode system that it looked like it was pretty developed and boom, you're up and running basically just by uploading an Excel spreadsheet of what you have on hand and then you could use either an actual scanner that you could purchase or you could use basically a barcode or a scanner from your phone and use it with that particular system. I thought it was pretty slick for relatively low cost. But ultimately, we just decided to go a different direction because of some of the accounting tie-ins.

But I think there are a lot of different systems out there with tremendous variation and sophistication levels. Very simple to super complex. And probably like most contractors, we do the same thing over and over and over again. It's installation on something and some type of roof system, and it's held down one way or the other. It's held down with screws and plates or adhesive or asphalt or something. So we're only tracking a certain number of codes. So if you are building an aircraft carrier, you probably need way different amount of inventory than just putting on a roof. So we like the simplicity, keep it simple, that's a great concept on inventory.

Heidi J Ellsworth: Yeah, I love it. So let's talk just a little bit about the overall. I know we talked about this, but I want to kind of make sure we really hit why it's so important to track your inventory so you know your numbers, so whether it's on real job costing, whether it's price increases, decreases, the kind of volatility of the market over the last couple of years, how does that really come back to affect your business if you're not tracking that? So Brad, what have seen since you did start tracking inventory and incorporating this into your amazing business, how has that really changed things and helped you?

Brad Sutter: Well, I'll try to give just the example when we had a supply chain, when we had so many issues. When the projects that we had bid prior to there being so many constraints and price increases and everything, we didn't have an escalation clause at that time because it was still evolving, that situation was happening real-time. And so those projects that we bid that had much lower material prices ended up not being good projects for us because the real costs of doing the job were just way higher than what the estimated costs were because of price shifts and price increases and everything like that. So those are the kind of things that if you don't know what you have and what you paid for it, if you are bringing something, some jobs are of a size where a contractor can bring all the materials out of their inventory, maybe not a big job or they're not... If you know what you pay for that job and you can accurately job cost that onto that project, you might be able to pick up a few points of margin just by good inventory management.

You're bringing it out at a lower cost than what you estimated, or if you've already paid for that material you have in inventory and you're bringing it over to the other job, that job's going to be flow positive much faster than if you're getting ready to pay one of the distributors for all that material that you just purchased. Well, you're waiting on the owner to pay you and then you have to pay your distributor, so there can be a time gap where you're out of pocket on the job until the owner pays you or if you have a dispute or something goes longer. I don't know if it's happened to other contractors, but there are just some owners that take a long time to pay you, and so those things happen. You might be able to withstand that a little bit easier if you're bringing something out of your inventory that you've already paid for, you can weather that cash flow disparity a little bit easier sometimes.

Heidi J Ellsworth: Yeah, that totally makes sense. We have I think this is a great question for Maureen. Thank you so much. She's wondering if there is a swag for the amount of inventory you should hold as a percentage of sales, looking for a benchmark of inventory volume as a percent of sales. Gentlemen?

Brad Sutter: Eugene?

Eugene Zukowski: I'm going to have to say, I'm going to ask Brad. Brad, what would be the correct inventory as percentage of sales?

Brad Sutter: I think the percentage is probably a tough thing because, I don't know, all different size, all different types of businesses. Are you all residential? All commercial? Do you do both? Do you do residential and you also do windows and doors? Do you do commercial and waterproofing? There's a whole bunch of stuff that would probably impact that. I would say that what I might look at if you're looking to benchmark, is to track your inventory month by month at month end. If you're doing a physical count of inventory at the end of every month, track that as a month by month graph and see what your inventory trend is. Because if your inventory swells up, if you're a seasonal contractor in the north where you're doing way more work May through October where you've got that big seasonal swell, your inventory's obviously going to go up at that time. So you could use that as predictive, "All right, we know that we're going to have a higher inventory starting May 1, so we need to have cashflow to pay for it."

There are a lot of things that you might think about there, but I think you look at your trends and then you look at those dollar value trends. Again, if you're a seasonal contractor, you may be trying to draw that inventory down as you close out your year and then you start buying again in the middle of the first quarter. Those are just things that I think if you're looking for a benchmark, your own internal benchmark of what you're carrying and if it feels like you have enough, you're able to execute your work pretty efficiently. If you're tracking month by month what you have, and it does not even have to be super sophisticated, that can be an Excel sheet of everything that you carry by brand or manufacturer and how many you have on the shelf. You can track that with a dollar value at the month end, and if you're looking at the trend line of how your inventory's flowing, that to me it's a relatively simple process to do that.

Eugene Zukowski: Yeah, that's a great KPI and I didn't mean to throw that question back at you, Brad. I just wanted to know if you had a percentage answer there, but that's really the way I would look at it too is what's sitting on the shelf the longest? What can we really, looking at previous sales, previous installs, what's going on, what do I know is going to leave this warehouse in 30, 60 days? Something like that where I can keep that good trend and that good information. And those are some great KPIs that you mentioned. Seasonality sales and things like that that you can really keep track of. And I have to say it, Jobba can help you with that as well with some of the dashboards and stuff that can be built in the platform, even help you guys get some good analytics on that stuff.

Brad Sutter: That's a great point, Eugene about, in its simplest form, "What do we have on the shelf right now?" That's the question that you're trying to answer. But as you build in levels of sophistication, the next thing you might want to know is, "Okay, not only what do we have on the shelf, but when did we buy it? What did we pay for it? When does it expire? And when do we need to really look at getting it out of here so that we can use it before if it has an expiration." Thank God screws and fasteners and plates never expire, thank God or we'd be an industry in distress. But I think that those are some of the other levels or layers that you can build in as you get more complex in inventory.

Eugene Zukowski: Yeah, I'm an impulse buyer myself, so that'll help stop me from buying something because it's a good deal. Just show me the data to calm me down. So yeah, I agree with that, Brad.

Brad Sutter: Yeah,

Heidi J Ellsworth: And I was going to say, that business intelligence, to Maureen's question, you if you are already using software and you can go back and look over the last 24 months, however long, you can see that and then start creating those percentages and those benchmarks in there. But a good business intelligence platform, BI, where you can get that reporting and really set that up is so critical.

Brad Sutter: Absolutely. And to your point, Heidi, and you're tying that back into your accounting and cash flow, right? So you see that trend line moving and you every year that you're ramping up for a certain amount, well, you're going to need the cash. You better have the cash on hand to pay for the material ramp up. So if you know that your inventory swells to whatever, if you normally carry 50,000 or 100,000, let's just say it's 100,000, that's an easy number to use. If you know carry 100,000 and it swells to 175 or 200 before you get going into the summer season, well you're going to have to pay for those materials and either it's coming out of cash flow or credit line, some way you need to account for that and the planning is a piece of that.

Heidi J Ellsworth: Yeah.

Eugene Zukowski: I also think that's a good point to look at it from purchasing decisions. If you know that if you can buy something in a little bigger bulk to save money and you're not sitting on it instead of buying it onesie-twosie when you need it, but if you know can get rid of this in 30 days, buy a little more bulk to save a few points, that's also some good information to help your company make good purchasing decisions.

Brad Sutter: Yeah, yeah, absolutely. If you know what your inventory turnover rate is on certain products, I mean depends on, again, what kind of work you do. But if you know you can turn a truckload of something quickly-

Eugene Zukowski: Yeah, whatever it is.

Brad Sutter: You buy a truckload. I mean some people buy bigger companies, of course you buy multiple truckloads of product and of course a lot of that is JIT or delivered job site delivery. But still you're still managing it, you're still getting it there and last time I checked, contractors still have to pay for it.

Heidi J Ellsworth: You just made me think of something too that I want to bring to the forefront, and that is working with distribution. So when you're looking, and Eugene, I'm going to start with you, with Jobba or whatever software or inventory management technology you're using, but being able to also integrate and work together with distribution, whether that's uploading, however that's going to be, talk a little bit about that because that's also going to help this automation.

Eugene Zukowski: I mean the ability to be able to get your information and pricing, pricing is a dynamic thing. I mean it's always constantly doing something, so we want to be able to make sure we stay on top of that information. Again, through our API, we have that ability to be able to communicate obviously even something more simpler, like to get update prices inside of the system. But I also think it's important to understand different pricing by different vendors so we have that ability inside of the system to have different price points and capture that information in the system so that way we don't overcomplicate our inventory system for all those different factors.

Heidi J Ellsworth: Brad, I mean relationships on your inventory between manufacturers and distributors, how do you juggle that?

Brad Sutter: Yeah, that's something that it can be really confusing because different distributors and manufacturers, some manufacturer has an item number and then a distributor may have a SKU number and the SKU number for one distributor for the same product is different. If you're getting really into the super sophisticated you're trying to program that in, it's very frustrating because you have to have so many different ways of identifying the same product. It's a little frustrating on that end. One of the things that I think that's good about distribution and they help us a little bit by being our inventory to some extent, for whatever you don't have in-house and you can pick those onesie-twosie items up to complete a job order or whatever, that's where it's valuable that you have those relationships and you know who's good at carrying what manufacturers or they can supplement what you might not have.

Heidi J Ellsworth: Yeah. I do want to, for everyone if you have any questions or comments as we're going through this, but I would love Eugene for you just to talk, I know we talked about it earlier, so that was great, but just kind of give everybody that full picture of how they can incorporate by using software like Jobba or using Jobba, how they can incorporate all of this together at the same time. Maybe go through that again.

Eugene Zukowski: Yeah, I think the big picture here is Jobba or any other platform, you want to be able to make sure your platform allows you to create inventory and have that type of ability to do physical counts and audits and track that information. But I also think a big part of it is consuming that material, where's it going, who's using it? And of course what we paid for it and being able to track all that information. For example, Jobba also has a PO module built into the system so we could track what we're paying for materials as we're implementing it and putting it into our inventory and then obviously are we charging it to the right project, the right job, the right cost, are my costs real? So the ability to track and keep all of that information, your platform should be able to help you do that.

Jobba already has it built in for you if you are happen to be looking for something, but I think it's just really important to level set, understand what you have, have a place that you can keep it and keep track of it. And then I'm a huge proponent of purchase orders because, one, the accountants like it and they yell at you really bad when you make them mad. So I want to keep the accountants happy. But I also think it's to kind of help you track that individual information so you can do things like standard costing or adjust costing of your material. Because again, if you buy it from 10 different places, that could be 10 different prices and that could just become a hot mess real quick.

Brad Sutter: Yeah. Heidi, I know we've tried to keep everything really positive today, I'm going to have to go over to the dark side for just a second, the negative.

Heidi J Ellsworth: Go there. This is a conversation.

Brad Sutter: So, Eugene, we're talking about metrics and whatnot. So let's just say that you had a foreman maybe that had the most material checked out but the lowest billings, that doesn't jive, that person checked out way more material than they build out on their jobs. Might that indicate a problem with that particular foreman?

Eugene Zukowski: It might. Now Brad, I agree. I'm a very positive person. Everybody's always honest and happy and smiley. But from time to time, there's some obvious things that we should be able to track. For example, we're pulling out cases of caulk out of the warehouse, but I'm looking at work orders and I'm building one or two. I mean that doesn't necessarily mean something bad's going on, but you need to have access to that information because I feel data helps you ask the right questions. It doesn't always answer what the question is, but it gives you the information to ask better questions and that's the kind of stuff that we want to track. Obviously Jobba has that ability to move material from my warehouse to my trunk, so you could be able to pull up at any point in time and say, "Hey, this truck should have X, Y and Z. Let's go take a look." Again, it's completely possible and I do think there are KPIs and red flags that a company needs to understand.

Brad Sutter: Yeah, I heard one time that there were some people, some roofers, guys that might perform some side work on the weekends. I heard that once.

Eugene Zukowski: I heard that rumor too. I haven't ran into it, but I've heard that that happens.

Heidi J Ellsworth: And that comes back to everything that we're talking about, cash flow, material theft, is everything in the right place? And I think that's really important. And we had a question here from Jim. Jim Carroll, thank you. "Are there any tools you would recommend to compare materials purchased on a job versus what's left over that could be automated to cause a review, to your guys's point, specifically for months or year-long projects where the daily usage may not be captured?" Eugene?

Eugene Zukowski: Yeah, I mean kind of the way the Jobba process works, it's really kind of built in. As we're doing our work, we're listing what we've consumed. So in my opinion, the only way that wouldn't happen in Jobba is if somebody didn't follow the process. And that to me is a different problem. Brad, do you have any input on this one?

Brad Sutter: I don't know if I'm reading this right, but I'm saying, okay, I see what's leftover, so I'm thinking leftover, that's the end of the job. So what I might look at, to your point, again, Eugene, I might look at every PO that was cut to that job and I would look at every material on each PO and then break it out by material, by purchase date and by price  and then looking at the average price, and maybe what the first price the first purchase was versus the last purchase or maybe the first purchase versus current price. I think that's what they're asking is looking over a long span job, how would you know how you compared from the start of the job to the past? I would use date-specific pricing and get an average against the budget that you had in there or what that PO is.

I mean at some point you paid for the initial shipment of materials and, who knows, maybe it's 15 additional shipments of materials on a really big project, you might've taken 15 or 20 deliveries on a job. So I would just look at it, did the distributor or the manufacturer lock in pricing for that particular job over the whole span of the job? They give you six months price lock, maybe, maybe not. So I think that I would look at this maybe looking at the purchase orders and just put it in a spreadsheet and saying, "Okay, day one purchase, purchase number two, purchase number three on that day, purchase number five," and look at the average compared to how much over the initial budget were you over under. I think that's the answer to the question, I hope.

Heidi J Ellsworth: Well, that would be something that could be set up within a business BI system also for reporting. So you could be tracking this as you go.

Eugene Zukowski: Yeah, you can definitely set this up as part of a dashboard, as something that you want to definitely take a look at. Without using Jobba or any other platform, I really think the only way you could answer this question is by at least having a PO system in place. If you're just purchasing materials and they're not charging against a job, you're never going to be able to separate, "Well, this was my budget and this was what was purchased for the job," I don't think there would be a way to really ever do that. At minimum, some sort of purchase order process needs to be in place, to answer the question.

Brad Sutter: Eugene, it's my experience I think even... And I don't know QuickBooks that well. I know it's like the smallest version of Sage, so I would think that even on the smallest scale, there has got to be a purchase order module with the line item pricing in there that would allow you to do it. And I think most contractors track costs by cost codes or by product grouping, whether it be, I don't know, underlayment, fasteners, shingles or underlayment metal accessories, whatever the case might be, I think that you're tracking against budget by job costing.

Eugene Zukowski: Yeah.

Heidi J Ellsworth: Great questions, everyone. Thank you so much for your comments. If you have any additional ones, please put them forward. Before we kind of move on to a few announcements and stuff, I have a question for both of you that I think is really important. Because I think contractors out there are going to implement, they're going to get the bar scans, they're going to implement some sort of things, but how do they keep it going? What is the long-term plan for really understanding and setting up the systems and processes, I guess is what I would really say, of being able to have long-term efficient inventory management? Because sometimes you know, "Okay, we've counted everything in the warehouse, we're good." No, now that's just the beginning. Eugene, talk a little bit about that.

Eugene Zukowski: Well, the only way you're going to keep it going, one, is obviously executive sponsorship. I think that's almost obvious. I shouldn't have to say it. The company has to believe that the effort is worth the bottom result. So it always starts at the top. And then I think standard operating procedures, the normal kind of stuff that you can do and then there's the day-to-day reality of it. Give your team tools that makes it easy to accomplish. Because what's going to happen is you're going to get that count, everyone's going to feel good, someone's going to get lazy that day, the next thing you know, they got a little lazy the next day, so on and so forth. But I definitely think tools that will help them. Obviously, I feel Jobba is one of those tools. Brad has implemented barcode scanners and things like that to make it less painful. So there's lots of ways to do it, but I definitely think executive sponsorship, then giving your team the right tools to keep it going.

Brad Sutter: Yeah, definitely. I was on the same track with you is at the operational level, you have to have one person or if you have multiple locations, you have to have a person in each location that is responsible for managing it. And Heidi, our former CFO had a saying, "That which gets measured gets improved." And I believe that to be true.

Heidi J Ellsworth: Nice, yeah.

Brad Sutter: You're measuring inventory and if you don't know what you have and you're just letting it swell out of control, that's not good business. It's not efficient use and it's not good cash flow. Like Eugene said, it can be whatever level of complexity you have, but making it matter and have somebody that it matters to, that's the first step. Make it part of someone's job. And if you have to, incentivize them to meet a goal, whether that be reducing inventory or getting it organized to where it is a repeatable monthly event to do that month end count so that you can get a trend line of what your inventory is month over month and year over year.

Heidi J Ellsworth: Yeah.

Eugene Zukowski: I know Brad said something about having somebody in charge of that, and a lot of people might think, "Well, that's an added expense." Just ask yourself what could be walking out the door, is it cheaper to hire somebody? Or are you losing more money walking out the door? As kind of a gauge to yourself, in my opinion.

Heidi J Ellsworth: Yeah, exactly. We have a quick question from Michael. "Can you explain the process of bringing materials into the warehouse that was direct shipped to job when jobs finish?"

Brad Sutter: Yeah, so I'll take that one.

Eugene Zukowski: Sure.

Brad Sutter: So, our process is, again, you might have a few buckets of screws, a pallet of insulation, some shingles, three rolls of underlayment that are left over from a job, some peel and stick or whatever it is. So you're bringing a quantity back into the warehouse, so back into your physical inventory, which is a general ledger. Typically on your general ledger inventory is whatever that is in your books, but you're bringing it off that job into inventory. So you're reducing the cost of those materials, material value, reducing the cost off of whatever job they came off of and increasing the material that's in inventory by the same amount, debit and credit, simple accounting stuff. In terms of that process for us, it's just a physical count.

It could be a few mixed pallets of stuff that are coming back in and we'll make a call and make a decision like, "No, that's just going to be here as $0 inventory. It's not enough quantity to reduce the job cost or to pull it back off the job, put it in inventory." It's still here and it's still going to get used, but we make a decision not to pull it off the job for one reason or another. Sometimes you just use some really strange materials on a job that you bought more than you needed just because you didn't know. "Well, I'm never bringing that back into inventory that's staying on that job until we use it again 15 years later," which we always think we're going to use something again and sometimes you just never do.

Heidi J Ellsworth: Yeah, I love it. Well, gentlemen and everyone out there, thank you for the amazing questions for the amazing work. Eugene, I would love you to talk just a little bit about, for people, everyone who's watching right now who's interested in finding out more about this and inventory management, how do they do it?

Eugene Zukowski: Yeah, just reach us out at Jobba.com/requestademo. You can always feel free to email support as well, or if you would like to email me, I can get you in touch with a salesperson to schedule a demo. But the easiest way would be Jobba.com/requestademo and we'll get you scheduled to take a look at our system.

Heidi J Ellsworth: Yeah, and all of this information is available on the Jobba directory, on all the coffee shops. So you can find this information, you can always ask us. We will send you whatever you need. And it's going in the chat right now where you can find more information. So again, this was awesome. And one of the things that goes hand in hand with what we're talking about today is it starts in the very beginning with estimating and what you're going to need. So we wanted to put a shout-out to our friend John Kenny, who Brad and Eugene both know very well, who is going to be doing a mastering roofing estimating presentation coming up in July, July 23rd and 24th. So if you are interested in getting to this event, please be sure to, again, reach out to Jobba, reach out to Cotney Consulting Group, which also has a directory on Roofers Coffee Shop. But this may be something that will help go through there too.

Finally, and one more exciting announcement, is a thank you to Jobba again, and I'm going to say that one more time, but we also wanted to make sure to let everyone know who's going to be at the Florida Roofing Show, Brad's not going to make it this year, but we've been at many of these shows together, and this is an amazing show.

Brad Sutter: Absolutely.

Heidi J Ellsworth: We're going to be coming live, we're going to have a live soundstage there. We're going to be live with Coffee Conversations, talking about what's happening in Florida. As we all know, what happens in Florida just tends to head West. So we're going to have a lot of great conversations. And that is all in the chat too, where you can sign up for that and know exactly what's going to be happening those days. Brad, thank you so much for being here today.

Brad Sutter: Thank you, Heidi. I appreciate you very much. Thanks for having me. It was a good chat with everyone.

Heidi J Ellsworth: It was great. Great information. Thank you so much for sharing your wisdom. I think that this is what makes this industry so great is how much everyone shares and really helps each other. So Eugene, thank you. Thank you so much to Jobba for sponsoring, and thank you again for being a return guest and really sharing such great information.

Eugene Zukowski: Thank you guys for letting me come back. Sometimes I feel like I shouldn't be allowed, but I do appreciate it. Brad, thank you for your time. And then Heidi, of course, thanks for the platform. And I will be an FRSA this year. So if anybody wanted to say hello. And I will actually be attending John Kenny's estimating class. So if anybody wanted to talk a little bit more, so I appreciate it.

Heidi J Ellsworth: Yeah, and if need to get Eugene's email or want to check in with him, that would be great. I am going to read this real quick. It said, "Heidi love this topic. Would like to see more like this featuring contractors that have implemented CRM, project management and are estimating platforms that can tell us about their experiences with the platforms and implementation." And you just made my day. Thank you so much, Jason. We're on it and we'll do it. And I have to give a huge shout-out to Carol at Jobba because she really comes up with these key information and for bringing this topic to the forefront. So thank you Eugene and Carol, I know you're watching. Thank you for all being there. And thank you all. It's the top of the hour. Have a great day. We will see you two weeks live from Florida and thank you so much. Have a great day.

Eugene Zukowski: Thank you, everyone.