The Hidden Cost of Too Much Inventory

Inventory is viewed as an asset with an assigned value, but too much inventory can hinder profit margins, reduce available cash flow, and end up costing you. As a bulk material (BM) company, it’s important to have the right amount of inventory on hand to meet the market demand, all while avoiding carrying excess inventory.

Excess inventory occurs when a BM company incorrectly orders inventory. If there is more inventory on hand than the market demands or market demands shift dramatically, a BM company could be left with more than they can efficiently sell.

Excess inventory has hidden, and not-so-hidden, costs. At Stockpile Reports, it’s our goal to help BM companies reduce risk and exposure, save time and money, and make inventory processes more precise and consistent. So, what are the costs of excess inventory?

Administrative Costs

We know that there are administrative costs associated with inventory management. From operation costs like rent, utilities, and payroll to inventory tracking and accounting, the buying, selling, transporting, handling and storage of materials is expensive. If BM companies are spending additional dollars on tracking and storing excess inventory, they are taking away from other revenue generating opportunities.

Reduces Available Cash Flow

BM companies need inventory on hand to meet the demand for the products they offer, but the more cash flow you have tied up in inventory, the less you have to spend in other areas. Companies that carry an abundance of inventory won’t have the cash flow to sustain digital improvement initiatives such as investing in new technology or process improvements. If companies order only the inventory they need and automate inventory ordering processes, funds will be allocated to the right areas at the right times.

Shifting Customer Demand

Having the right amount of inventory when it’s needed is essential, but having excessive inventory can be expensive and troublesome. The market drives demand for materials and products and tying up funds in excess inventory can be detrimental. If demand drops dramatically or goes in a different direction, companies could get stuck with inventory that no longer has the same value that it used to. BM companies must be agile and shift to meet market demands as quickly as possible without sacrificing profitability.

Inventory Takes Up Space

One major concern surrounding excess inventory is the cost involved with storing it. If the excess of one product is taking up valuable ground space, BM companies will lose out on being able to carry one or more profitable materials and products. Meanwhile, they are also measuring and managing low-turnover inventory that isn’t turning a profit or is experiencing decreased profit margins.

Reduced Profits

Excess inventory leads to reduced profit margins and year-end profitability. Companies with excess inventory often lose profit by carrying inventory in excess of what the market is demanding. This can happen as a result of human error or poor inventory insights and lack of best management practices.

BM companies may take a hit to their profit margins as well because they will be forced to sell excess materials at discounted prices to free up profitable space. If demand shifts away from the material entirely, a BM company is left with a material that is no longer worth what it was paid to produce, inventory, and transport it.

For example, as car dealerships near the end of the year and have the opportunity to bring new, higher value vehicles with significant profit margins onto the lot, we begin to see “end of the year flash sale” marketing. Why? Because last year’s models are taking up space on the lot and they need to be sold to free up space for the new models with higher demand. Dealerships discount these vehicles, making for a reduced profit margin, all for the sake of freeing up space and to make more money on high-demand vehicles. You won’t see a dealership holding onto a 2006 model in order to get full price when they could have the latest model on the lot.

Striking a Balance Between Inventory and Sales

Whether you are a ready-mixed concrete (RMC) company, an aggregates supplier, a state DOT, or a pulp & paper plant, finding the balance and the “sweet spot” for BM inventory can be an ongoing challenge and the cost of doing it inefficiently or inaccurately can hinder the profitability of a BM company.

Why Companies Needs to Part 107 Certify Their Drone Pilots

The first step of creating a drone program at any company is ensuring each pilot has the proper certifications. Clients often ask us if getting certified is necessary since their locations are located far away from airports and urban centers. It is the law to be certified to fly a drone commercially. However, even if it weren’t, we strongly urge clients to become certified for one reason: RISK. In the following article, we are going to explain why commercially certifying your drone pilots is not only the law but also it is necessary to mitigate the exposure to major legal and financial risk.


Skip the FAA Part 107 Certification Process and Have Stockpile Reports Fly For You

Stockpile Reports believes inventory management should be automated across the whole company enabling the workforce to focus on other high-value tasks. We have a network of drone and fixed wings pilots who will measure your inventory without any employees lifting a finger.

If you want to skip the process of building an enterprise drone program at your company, use our pilots instead. Our pilots are experienced, commercially FAA-certified, and insured. To learn more, go here.


What is the Part 107 Commercial Drone Certification?

Any pilot flying a drone for commercial purposes must take a Part 107 certification test from the FAA. According to the FAA’s “Know Before You Fly” website, any commercial drone use in connection with a business needs to be Part 107 certified, including:

  • Selling photos or videos taken from a drone
  • Using a drone to provide contract services, such as industrial equipment or factory inspection
  • Using a drone to provide professional services, such as security or telecommunications
  • Using a drone to monitor the progress of work your company is performing

In other words, if your drone is improving your business, you have to be certified.

The FAA Part 107 website provides all the information you need to know to get started with the process. https://www.faa.gov/uas/commercial_operators/

Besides the Law, Why Should I Get Certified?

Building material companies spend significant time and effort to mitigate risk in their business. Safety programs are implemented and strictly followed to ensure the risk of injury is minimized. Likewise, they also invest in inventory management technology to ensure financial risk is kept at a minimum. The same energy spent on injury and financial risk systems must to be applied to enterprise drone programs. This is where commercial drone pilot certification and insurance comes into play.

Drones used for mapping quarries are small and typically do not weigh more than a few pounds. However, these drones have the potential to cause a large amount of damage to persons and property. In the event that your drone crashes into a vehicle, structure, or a person, your company will need to be protected by insurance to minimize the financial and legal risk.

Obtaining liability insurance for your pilots’ drone operations is inexpensive and an easy process. Options range from short term insurance covering a single flight to long term insurance (think vehicle insurance for your car). Once you have determined which insurance choice best fits your need, the drone pilot will need to provide proof of Part 107 drone certification from the FAA. This is why your pilots need to be certified prior to starting an enterprise drone program.

How to Become a Part 107 Commercially Certified Drone Pilot

The Part 107 drone certification process is similar to obtaining a driver’s license. The pilot will need to pass a 60 question multiple choice test (70% or higher is passing). Self-motivated pilots can study for the test using inexpensive guides for purchase. For pilots who are short on time or needs a more hands-on approach, an online module-based training program or an instructor-led in-person class would be the best option. Online training costs between $250-$500 and instructor-led classes cost around $800 plus travel expenses.

The FAA has excellent information detailing the complete process for obtaining certification: Become a Drone Pilot FAA Website.

Don’t Take The Risk

Those truck drivers are licensed and insured, you should be too!

You would never allow a truck driver to operate on your site without their CDL and insurance. The same goes for drone pilots. At the end of the day, if something goes wrong with a drone flight, your company will be protected by the drone certification in insurance.

If your company is interested in establishing an enterprise drone program, it’s important to consider the financial and legal commitments and associated risks. Stockpile Reports can act as your enterprise drone program, freeing up time, money, and resources to focus on high-value tasks. If you are ready to chat with us, contact us today!

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Idaho Transportation Department Chooses Stockpile Reports

Stockpile Reports is proud to announce the Idaho Transportation Department (ITD) has selected Stockpile Reports for the improved management of their materials using our inventory tracking software and iPhone app. ITD is starting with a 600 stockpile subscription and anticipates approximately 120 users will be actively measuring their materials with Stockpile Reports in 2019.

History of Our Relationship

In 2015, the Texas Department of Transportation (TX DOT) chose Stockpile Reports. Armed with the tools they needed to improve their inventory measurement processes, TxDOT experienced tremendous gains and saw significant improvements in their ability to manage their inventory over time. We were thrilled that they had shared their successes with other DOTs, including the ITD.

Darran Anderson, Chief Strategy and Innovation Officer of TX DOT stated that the Stockpile Reports application calculates stockpile volume as accurately as their GPS survey method and provides the following financial benefits:

  • Requires no additional equipment investment
  • Halves the personnel required per stockpile measurement
  • Saves $2.1M per year in measurement costs
  • Saves 20 FTEs per year in measurement time
  • Improves employee cubic yard estimates 27%
  • Adjusts existing cubic yard inventory quantity down 40%

After discussions and a successful trial of the Stockpile Reports software on a few of their six districts, ITD chose to roll out Stockpile Reports to the rest of the districts. Their primary focuses are:

  • Ensuring deliveries are in alignment with orders;
  • Ensuring materials are available and properly allocated to designated projects;
  • Ensuring materials, such as salt, are available during weather events;
  • Improving data consistency through precise and reliable inventory counts;
  • Providing enhanced transparency from the ground up;
  • Becoming more efficient by digitizing previously manual processes; and
  • Ultimately, saving taxpayers dollars by leveraging new efficiencies.

How Much Time Will They Save?

Before Stockpile Reports, a manual inventory count across all the ITD districts could take months and hundreds of thousands of taxpayer dollars. There are so many moving parts and data flowing between so many people, it’s inevitable that errors and discrepancies happen. Because a statewide inventory count was such a significant time commitment, it was only performed on an annual basis. Seeing the potential for improved processes, more efficiency, and better data, ITD chose Stockpile Reports.

ITD can now complete an entire statewide inventory count in less than a week. Rather than conducting only a single annual inventory count, the time savings gives ITD the power to conduct inventory counts at any time. Their data will be precise, reliable, and consistent, and ultimately save them time and taxpayer dollars.

Will It Eliminate Risk?

Over the next few weeks, our customer success team will be training ITD team members on the technology, software, and dashboard to ensure precise and quality inventory measurements. ITD will no longer be held up by the bottleneck of using specialized survey crews to perform inventory. Instead, they are able to distribute the workload of measuring stockpiles to all the ITD employees via the Stockpile Reports iPhone app. Once the measurements are uploaded, the data becomes available to everyone across the ITD organization via the Stockpile Reports web portal.

In the old paradigm of once-a-year annual inventory counts, DOTs can assume that they’ll be staring at 12 months worth of variances and discrepancies, exposing them to a significant amount of financial adjustments. With Stockpile Reports, that risk is a thing of the past.

What’s Next for DOTs?

DOTs are knocking on the door of digitalization. Focusing on saving hard-earned taxpayer dollars by leveraging technology and digital tools, Stockpile Reports is proud to stand in partnership with DOTs across the nation. For more information about Stockpile Reports and how our software can help to take your department to the next level, contact us!


WASHTO 2019 – Glendale, AZ
Stockpile Reports will be attending the 2019 WASHTO event in Glendale, Arizona. We will be hosting a booth, showcasing our software and the positive impact that our tools have had on DOTs. If you will be there, feel free to stop by and say ‘hi’. If you haven’t yet registered for this event, we hope you decide to join us!


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Why The Ready Mix Concrete Industry Must Modernize for the Future

At Stockpile Reports, we are deeply invested in providing precise, fast, and reliable inventory solutions to the bulk materials industry. We recently announced our newest solution, Stockpile Reports for Logistics, a near real-time auto-replenishment inventory solution. Our Logistics solution uses low-cost fixed cameras and Stockpile Reports’ pile modeling system to provide near real-time inventory levels, dramatically improving the way that ready-mixed concrete (RMC) companies measure and track their inventory, driving efficiencies at all their plants.

Numerous trends in the RMC industry will require digitization of core functions of businesses to remain competitive, reduce write-offs, eliminate risks, and become more profitable than ever before. Digitizing core functions of an RMC company may sound daunting because where do you start? But remaining in the “wait and see” zone isn’t an option any longer.

There is a major, fast-paced move towards digitalization sweeping the market today. At the core of this digital transformation are technological solutions aimed at improving, enriching, and maintaining functions of businesses alike.

Not Digitizing Core Functions is No Longer an Option

Experts suggest that the construction industry is one of the fastest growing industries in the U.S. and is expected to have one of the largest increases in real output, reaching nearly $1.2 trillion dollars by 2020.

RMC manufacturers must become agile and reallocate their workforce to production tasks to meet the demands of the construction industry.

In order to accommodate for growth and make this shift, manufacturers will find themselves digitizing previously manual tasks, such as inventory counts, to free up their workforce. They will find themselves relying on real-time data to improve their internal processes, like order processing, and inventory and production control, to harness even greater efficiencies.

Alternatively, if manufacturers choose to ignore change and continue to do business as usual, they will likely find themselves outbid by competitors. Lagging behind in digitization will create an increased level of frustration and tension between production and management, or even worse, cause the manufacturer to knock on the door of exiting the market altogether.

Failure to digitize and keep up with the fast-paced technological advances that are occurring in the industry could be detrimental, if not fatal. On average, over 30 percent of plants existing in one Economic Census will no longer be operating five years later when the next census is taken. This level of change might strike some readers as high, but it is within the typical range observed across four-digit manufacturing industries.

Digitizing Decreases Write-Offs

No one wants to talk about the end of the year and the impending write-offs that are looming over everyone’s heads. We all know it’s coming, but we are all pretending like maybe it won’t be as bad as last year.

Inventory write-offs, especially large, recurring write-offs, can indicate that an RMC plant has poor inventory management. The plants may be purchasing excessive or duplicative inventory because they are uncertain what they currently have on hand, need to reorder, are using existing inventory inefficiently, or all of the above.

To avoid ordering too much or too little inventory, companies are able to automate the entire process by continuously monitoring stockpile inventory levels. Stockpile Reports for Logistics utilizes affordable fixed cameras to monitor inventory levels in near real-time and reorders inventory when needed. Orders are placed automatically when stockpile levels drop below a customer-defined threshold, eliminating human-error entirely.

Bulk material companies can trust that their inventory levels are being precisely and consistently monitored to increase production, eliminate risk and human-error, avoid stock-outs, and drive efficiencies to record levels.

Digitizing Frees Up Thousands of Man-Hours per Year

RMC companies should also consider digitizing their inventory measurement process completely. What if an RMC company could measure their stockpiles via a drone, airplane, or iPhone, then view the results of the measurements through a user-friendly dashboard, freeing up thousands of man-hours per year? Well, it’s not too good to be true and it’s easier than one might think.

Based on established SOP’s (Standard Operating Procedures), RMC inventory is typically counted at the end of a given time period and costs of goods sold are recorded based on the difference between the available inventories and the ending inventories. RMC plants often do daily inventory checks to confirm replenishment orders and perform monthly inventory counts to reconcile delivery tickets with finance.

Digitizing inventory measurement and management creates transparency between leadership and production, reduces risk, eliminates human-error, provides insight into areas for improvement, and allows for the reallocating of man-hours to revenue generating production tasks.

Digitalization Increases Productivity

According to a Market Research Future raw research report, the RMC industry is expected to grow at a CAGR (compound annual growth rate) of 8.02% from 2017 to 2023. This growth is attributed to many factors including an increase in population and the associated need for residential homes, commercial buildings, retail spaces, and infrastructure such as roads and highways, etc. to support the population growth.

If a plant digitizes its inventory measurement and management processes, including automating the ordering of materials, it can reallocate workers to revenue generating production and delivery tasks. Closely monitoring these KPIs is critical to improving profitability and remaining agile to the demands of the construction industry.

More, More, More!

As RMC producers begin to digitize their operations and material tracking, they begin to reap the benefits of efficiency. They are able to produce materials more efficiently and meet the demands of the marketplace without cutting corners.

RMC producers are not just manufacturers, they are logisticians: they deliver, typically on short notice, a perishable product to time-sensitive buyers in multiple locations and they need to do it efficiently to avoid inventory loss and remain competitive.

Automating previously manual tasks can free up resources to produce more and deliver more and do them both more efficiently than ever before.

Automation and Digitization Are Knocking

With Stockpile Reports for Logistics, you will have the power to easily automate all your material reorders and eliminate tying up all your man-hours with inventory counts. Gone are the days of daily inventory checks, monthly and quarterly inventory counts, and large, recurring write-offs.

Automation and digitization are taking the industry by storm. It’s a huge shift that is taking place in many industries but particularly in the construction and building material industries. Companies are taking on digitizing core functions of their businesses to harness efficiencies, which will prove to be critical in the immediate future and well into the next decade.

It’s time to step into the ring and improve your bottom line. Are you ready?


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State of Texas Ranked #1 in Stockpile Reports Most Digitized Building Material Industries

The ready mix, aggregates, asphalt, and transportation industries in Texas are leading the country in their advancement of technology. With an exploding population and the growth of high tech companies, it is no surprise Texas leads in innovation. We researched digitization efforts across the country and Texas clearly came out on top. This is why we are proud to announce the Texas building materials industry as the leader in innovation. Interested in who we determined as the top 5? Continue reading “State of Texas Ranked #1 in Stockpile Reports Most Digitized Building Material Industries”

Digital Transformation: Get Onboard or Get Left Behind

Bulk material industries are going digital with or without you. If you don’t get on the Industry 4.0 bandwagon soon, you’ll be left behind – and you’ll be less profitable than had you taken the leap when you should have. We’ve all heard the saying, “if you are green, you are growing; but if you are ripe, you are rotting!” Organizations like yours are devoting time and money to saving time and money – it’s that simple.

Continue reading “Digital Transformation: Get Onboard or Get Left Behind”

Introducing Todd Cope: An Aggregate Industry Expert Joins Stockpile Reports to Help Businesses Make Better Inventory Tracking Decisions

Stockpile Reports is excited to announce the addition of Todd Cope to the team as a Sr. Solutions Consultant. We are thrilled to welcome him and his 20 years of hands-on aggregate and ready-mix industry experience. What makes Todd unique to our team is that he has lived the complex struggles of an onsite aggregate and ready-mix district manager firsthand. His ability to understand and relate to the pain points of our consumers and find solutions for those customers is invaluable.

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The Dirty Secrets of Stockpile Inventory Management – Part One

A Two-Part Series on What Stockpile Measurement Services Are Not Telling You

Drone companies are announcing new hardware advancements on a monthly basis with technical terms such as RTK, PPK, Megapixel, etc. All of these advancements promise improved absolute point cloud accuracy at an increasingly smaller fraction of a foot. Our clients are constantly asking if they should upgrade to the latest drone. While the new drone hardware will measure more precise surface data, no one talks about a set of two factors that can easily erase any accuracy claims on stockpile measurements. In this two-part series, we are going to deep dive into the two major factors that can derail any stockpile inventory management program.

Continue reading “The Dirty Secrets of Stockpile Inventory Management – Part One”

Airspace Issues? No Problem with Stockpile Reports

At Stockpile Reports, we believe measuring inventory should be easy for any organization, big or small. A challenge for many of our clients who fly their own drones is navigating the FAA’s airspace regulations. In this article, we guide you through the process of determining if you are in controlled airspace, break down your options for measuring stockpiles near an airport, teach you what to do if you need a waiver, and guide you through DJI’s newest Fly Safe update, GEO System 2.0.

Continue reading “Airspace Issues? No Problem with Stockpile Reports”