A small electrical contractor with three service vans asks on Mike Holt's forum, a US forum for electricians, how others track the stock in their vans. One electrician describes the contractor he works for most: everything is somewhere in the truck, and buying the part new at the supply house usually takes less time than finding it. Another quotes his old boss, for whom there was no difference between "don't have it" and "can't find it".
Without a recorded quantity per van, nobody knows whether searching is worth it or whether the part is not on board at all. This applies to every place that holds material, whether a second hall, a branch or a van. A total tells you that there are 40 cartridges in the business. It does not tell you whether the van leaving for the job site tomorrow morning still has any.
When is a separate storage location worth it?
A separate storage location is worth it as soon as your team needs to know where an item is right now. A business has a main warehouse and three vans. The technicians in van B need an ABB F204B RCD. They only find out whether van A has one on board by calling A and asking the crew to check. With a separate stock per van, they see it straight away.
The same applies between sites. At site A, a machine is down because a Siemens SINAMICS frequency inverter has failed. Without a shared stock overview, the team calls the other sites one after another, and at each one a colleague has to walk into the spare parts store and check. The machine stays down all that time. If everyone can see the others' stock, one look shows that site B has one, and site A sends someone over to pick it up right away. An expensive spare part then does not have to sit at every site, because everyone can see what is where.
This overview takes work. Every movement to and from a storage location has to be recorded, otherwise the overview shows material that is not there. So only set up a separate storage location where the overview saves someone the call or the trip.
What is the difference between storage location, bin location and site?
- Storage location: has its own quantity, reorder point and maximum stock. Examples are the central warehouse in the hall, the workshop or van number 3.
- Bin location: the spot within a storage location where an item sits, such as shelf 3, bin B. It helps you find things and keeps no quantity of its own. With a fixed scheme for naming bin locations, everyone on the team finds the same bin.
- Site: the business address. The supplier delivers to the site. A business with a head office and a branch has two sites, each with its own storage locations.
So a business with one address has one site, even if it runs five vans.
What belongs in the van?
The van should carry whatever completes the most jobs, not simply what gets used most. John Mamer and Stephen Smith choose the contents of a field repair kit by one metric: the share of jobs that can be completed entirely from its contents (Management Science, 1982). A job only counts if every part it needs is on board. A frequently used part is of little help if a rare one for the same job is missing.
For the van, you can apply this without a math model:
- Take a technician's last 50 jobs and note all the material used on each.
- Count how many of these jobs the van could have finished with its current contents, without anyone driving to the supply house.
- For the rest, check which parts were missing. Parts that would complete several of these jobs go in the van with a fixed quantity.
- Vans in the same trade get the same list, so every technician finds the same things in every van.
In the Mike Holt thread, an engineer describes two habits that fit: every part has a fixed place in the van, and the technician checks in the morning that everything is there. If the bins are labeled, as in any well-organized stockroom, he says this takes only a few minutes.
An electrician in the same thread names the limit: wire is hard to track because nobody restocks it by the foot, and spending too much time recording 10-cent parts can leave you worse off.
Our recommendation: record packs and coils instead of pieces and meters. Keep the fischer DuoPower 6 x 30 as a pack of 100 and NYM-J 3 x 1.5 cable as a 50 or 100-meter coil. In the warehouse, the whole pack or coil is always taken and moved to the van stock, for example, with a stock transfer. The technician only records whole units, and that is efficient, simple and fast.
How much stock belongs at which location?
The central warehouse holds the reserve against supplier delays. Every other storage location only gets what it uses until the next restocking, plus a small reserve for unplanned jobs.
In Gary Eppen's model, decentralized inventory is never cheaper than one central stock (Management Science, 1979). The gap grows the more independently demand fluctuates at the individual locations. If three vans each carry ten cartridges as a reserve, 30 cartridges have been bought that do not help the fourth van when it runs empty.
So every storage location except the central warehouse gets two values of its own:
- Maximum stock: the consumption between two restocking days plus a small reserve for an unplanned job. This reserve stays in the van, because a technician on an emergency call cannot drive to the central warehouse first. On the fixed restocking day, the van is topped up to this value.
- Reorder point: the quantity at which the van needs replenishment before the restocking day, because a big job used more than planned.
For the central warehouse, you calculate with the supplier's lead time. For the van, you separate two periods: the maximum stock covers the week until the next restocking day. For the reorder point, only the time until the van can be loaded after an alert counts, for example until the next morning.
| Storage location | What it holds | Calculated with | Replenished from |
|---|
| Central warehouse | Reserve against supplier delays | Supplier lead time | Supplier |
| Workshop | Usage until the next restocking day | Time until restocking | Central warehouse |
| Van | Weekly demand plus a small emergency reserve | Time until loading after an alert | Central warehouse |
| Job site container | Material for a project of several weeks | Project duration | Central warehouse, rest goes back |
Beispiel
A technician uses an average of 6 cartridges of silicone per week, spread over 5 working days. His van is restocked from the central warehouse every Friday. After an alert, it can be loaded the next morning. 2 cartridges are set aside as a reserve for an unplanned emergency call.
=Van maximum stock = 6 + 2 = 8 cartridges, topped up to 8 every Friday. Reorder point = 6 ÷ 5 days × 1 day + 2 = 3.2, rounded up to 4 cartridges.
Job site container: a separate storage location pays off for projects that run several weeks with several people taking material. For short jobs, record the material straight to the job as consumption. At the end of the project, transfer what is left back to the central warehouse. Whatever is not recorded back stays on the container, even though it has long been back in the central warehouse.
How do you transfer material between two storage locations?
For a stock transfer, you choose the source location, the target location and the quantity. Stock goes down at the source and up by the same quantity at the target. Total stock stays the same, and the movement does not count as consumption. This applies to loading a van from the central warehouse as much as to moves between two vans.
For moves between locations of equal rank, such as van to van, inventory research distinguishes two cases (Paterson et al., European Journal of Operational Research, 2011): planned ones, where stock is rebalanced between locations at fixed times, and reactive ones, when a location faces demand it cannot meet itself. The technician who grabs two cartridges of silicone from a colleague's van is the reactive case. This movement gets recorded too.
Two recording errors distort the numbers:
- The transfer is recorded as consumption. The central warehouse reports usage although the material is only sitting in the van. If it is recorded as consumption there again later, the same item counts twice, and order quantities come out too high.
- The transfer is not recorded at all. The central warehouse shows material that has long been in the van, and the van shows too little. If that drops it below its reorder point, it gets replenished with material it already has on board.
Record it at loading, the moment the material leaves the shelf.
How does replenishment get from the central warehouse into the van?
With a maximum stock per van, the loading list on restocking day is the difference between the maximum and what is left in the van. You only know what is left if the technician records his usage from the van. If a van drops below its reorder point earlier, the item goes straight onto the central warehouse's list.
In the Mike Holt thread, an electrician describes how a former employer did this on paper: every part used went on the job sheet, down to wire nuts and washers, and at the end of the day the van was restocked from these sheets. Another writes that the key to keeping the trucks stocked is keeping the shop stocked.
If four vans report demand for cartridges, the central warehouse covers it from its own stock. It only orders from the supplier once it falls below its own reorder point. The German business encyclopedia Gabler Wirtschaftslexikon names this bundling of goods flows as a goal of a central warehouse, alongside lower stock across the whole system.
Set a fixed day and one responsible person for restocking. If everyone restocks as they see fit, the central warehouse cannot plan its own replenishment.
How do you count several storage locations at stocktaking?
Count each storage location separately and compare the result with the recorded stock of exactly that location. The difference per location shows you where records are missing: if an item is regularly short in the central warehouse while the van holds more than recorded, transfers are not being recorded at loading.
How often recorded stock is wrong shows in a study by Nicola DeHoratius and Ananth Raman: of nearly 370,000 inventory records from 37 stores of one retailer, 65 percent did not match the actual stock (Management Science, 2008). How the stores audited their inventory was among the factors that reduced the errors.
Count vans when they are in the yard, ideally right after restocking, because the target stock is known then. The same principle applies to the annual stocktaking, just for all locations on the same reference date.
What does software for multiple storage locations need to do?
Above all, it has to be simple, otherwise nobody records anything. Complicated tools are annoying, and what annoys people does not get used. Stock, reorder point and maximum stock per storage location, plus a transfer that does not count as consumption, are the basis. Also check three things:
- A quantity of its own for the van: Can the van be set up as a storage location, or only as a bin location? Without its own quantity, it has no reorder point of its own.
- Recording at the van: The technician must be able to record usage at the van by phone. Otherwise the remaining quantity for the loading list is missing.
- Plan: Which plan includes multiple storage locations?
With stock tracking per storage location, everyone records what they take by phone right where they take it, and the central warehouse sees what needs to be reloaded.
Conclusion: Multiple storage locations need separate stock
A separate storage location is worth it wherever the overview saves someone the call or the trip. What goes in the van is decided by the jobs it should be able to finish on its own.
Start by listing every place your team takes material from, and decide for each one whether it becomes a storage location of its own or a bin location in the central warehouse.
