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6 Ways to Prevent & Battle Inventory Shortages

One of the key considerations of running your own heating and air conditioning business is maintaining an optimal inventory level. This includes having enough equipment, supplies, and systems for both regular and sporadic, unpredictable demands. On the one hand, having too many items in stock can lead to unprofitable operations. On the other hand, experiencing constant inventory shortages can also negatively affect your business

How can I fight my inventory shortages?

The trick to maintaining a good inventory and battling potential inventory shortages is in maintaining the delicate balance between overstocking your inventory and allowing your inventory to become understocked. Let’s explore some methods that will help you prevent shortages without causing potentially costly overstocks, as well combat shortages if they occur:

Preventing shortages

There are several strategies you can implement to prevent experiencing inventory shortages: 

Monitor lead times

The lead time is the time between placing your order and the delivery date when that order becomes part of your inventory. Closely monitor your distributor's lead times and adjust your orders accordingly. Consider placing a stocking order to stay ahead of increasing lead times during the busy season. 

Accurately calculate your reorder points

Speaking of accuracy, it’s also important to calculate your preorder points as precisely as possible. Your reorder point is the minimum stock level you don’t want to go under. For example, when you notice that one of your items is reaching its reorder point, it’s time for a prompt replenishment that helps you avoid shortages. The three steps of calculating reorder points are: 

  • Calculating your lead time demands

  • Calculating your safety stock

  • Summing up safety stock and lead time demands to receive your reorder point

Use precise demand forecasting

Demand forecasting involves using your past historic inventory data to determine the amount of item stock that allows you to meet client demand. What’s more, predictive forecasting and data analysis improves your decision making by helping you estimate your correct inventory size. This way, you will not overstock or understock your inventory, preventing losses for your business. 

Implement remote diagnostics

Finally, you can avoid inventory shortages by offering your customers remote diagnostic capabilities that allow you to anticipate potential system faults and order the necessary replacement parts on time to avoid delays. 

Fighting shortages

At times, an inventory shortage can become inevitable due to current market conditions and the state of supply chains. The ongoing COVID-19 pandemic is one of the clearest examples of how unpredictable circumstances can negatively impact the entire heating and air conditioning industry, as well as the rest of the world. 

While you cannot prevent global trends and supply insufficiencies, you can prepare for unforeseeable events and develop strategies for combating shortages. Here’s what you can do if you’re running out of the necessary inventory: 

Put a spotlight on preventive maintenance

If your inventory is scarce and you cannot find the necessary replacement and repair equipment, shift your focus on performing preventive maintenance that will extend the lifetime of your clients’ HVAC units. 

Regular preventive maintenance should always be one of the goals of your company, especially during inventory shortages. Preventing issues before they arise will lower the need for new parts, increasing your business’ operational efficiency and allowing you to meet customer demand even if your inventory is currently understocked. 

Provide support to your technicians

Limited resources force your technicians to become creative with their problem-solving. This can cause a situation where your technician has to work with unfamiliar equipment, causing them to lose efficiency. You can overcome this issue by providing the necessary support and training to your technicians and get them proficient with equipment you have. fighting-shortages-(1).jpg

The Larson Company can help you make decisions about your inventory 

Successfully managing your inventory shortages is a vital part of running a successful heating and air conditioning business. However, it’s not the only important aspect. You should also know which business metrics to monitor to grow your company, how to attract new prospective HVAC technicians, and learn how to adequately manage your online reviews. However, there’s one last piece of the puzzle – partnering with a reputable wholesale distributor.

That’s where you can depend on the Gustave A. Larson Company. We are one of the leading wholesale distributors of cutting-edge HVAC systems, equipment, tools, and supplies. What’s more, we offer numerous training programs that focus on the latest industry trends. Finally, we can supply your business with a selection of advanced software suites to further optimize your operations. Reach out to us today!