From Chaos to Clarity: Getting Started with ServiceTitan Inventory Management

Are you ignoring that mess of inventory in your warehouse because you think it’ll be too painful to sort out? Ignorance is not bliss, says Steve Cossette, and bad inventory management only leads to cost inefficiencies, lost revenue, and a much bigger mess.

“Honestly, the most painful part about inventory is not the tracking of the actual materials. It's the human factor,” says Cossette, IT Manager of Nice Home Services (NHS) in Virginia. “Sometimes people don't do it right or they don't understand the nuances of the system.”

Before switching to ServiceTitan contractor inventory management software, Cossette says NHS was using QuickBooks Desktop with inventory tracking, but the software had “virtually no guardrails” to prevent users from entering inaccurate data or making mistakes. When his boss discovered bloated warehouse numbers while preparing taxes in 2021, he asked Cossette to start all over with ServiceTitan.

“Things have to follow a certain workflow, or it's going to get completely messed up,” Cossette says. “We had a mess. I helped to fix it.” 

Today, Cossette is a ServiceTitan power user and moderator of the ServiceTitan Masterminds Facebook group on inventory and purchasing. He joins us on the first episode of the new Mastering ServiceTitan podcast to share his knowledge and expertise on how contractors in the trades can implement better inventory management.

>>Listen to the full podcast on inventory management now on Spotify, Apple, or YouTube.

“Inventory is one thing that frustrates a lot of warehouse managers because there are a lot of moving parts and there are a lot of hands in the cookie jar,” Cossette says. “If you don't lock down your warehouse and you have a lot of people transferring stuff, they don't always enter it into ServiceTitan properly. So, then you're kind of left with a messed up warehouse.”

What is inventory management?  

Inventory management requires strategic planning, accurate forecasting, and consistent tracking of all materials and equipment either stored in your warehouse or stocked in your technicians’ trucks. To master inventory management, you need to know what you have, where it’s located, how it’s priced, and whether it’s available for the next booked job. 

“Inventory management is a system that allows you to track logistically through data and reports exactly what's going on in your warehouse, when it's happening, and how much it's costing you. It basically involves every single step of the process of your day,” Cossette says.

The ServiceTitan inventory module helps to simplify inventory management with streamlined efficiencies to generate purchase orders, manage returns, conduct inventory counts, do transfers, make adjustments, and pay bills — all from one system.

>>Want to see how ServiceTitan contractor inventory management software works? Check out the latest on inventory management from one of our Pantheon presenters.

“You have multiple little modules,” Cossette explains. “Each one essentially reflects what you do in real life in your warehouse. And everything you do in real life has to be entered in the system. If not, you're making multiple mistakes at once.”

Why do contractors need inventory management?

Contractors must track inventory and manage resources effectively to increase operational efficiency, maximize profits, and provide better customer service. But the method you use to track inventory can actually make or break the process.

“Some give complete control over to a local vendor that replenishes the warehouse, depending on a set template. It's basically letting someone else do it,” Cossette says. “Some people are using an ‘ignorance is bliss’ kind of approach. In other words, they literally don't track it. They make a guess based on how much they sold in the year.

“Tracking your inventory makes it easier for you to build your pricing and know what your actual material costs are,” Cossette says. “It makes it easier to get good numbers for the business owner.”

Do only large companies need inventory management?

The size of your service business often dictates the level of inventory management needed, which ranges from the hands-off methods described above to comprehensive software like ServiceTitan contractor inventory management.

“If you're a company that does $20 million to $50 million a year, if you don't do inventory management, I would say that's a red flag,” Cossette says. “But if you're a company that does less than $1 million and you have 10 employees, you might not need a full-blown inventory management module. 

“Inventory management can be enabled at different levels,” he adds.

How do I start inventory management?

Before diving into the nitty gritty of an inventory management system like ServiceTitan, Cossette suggests starting with inventory cleanup and organization.

“In your pricebook, make sure your materials are all assigned to your tasks, at least with an average quantity and hours for each task,” he says.

In addition, inventory items need to be listed as materials or equipment in your pricebook, the primary vendor must be selected for each item, and the specific cost must be included.

“You'll be able to look at your job costing based on what you entered in your pricebook and see how much you should be getting in profits,” Cossette says.

In your physical warehouse or storage space, place all inventory in bins, classify each bin with a simple numbering system, then label each numbered bin for easy identification.

When should I do inventory counts?

Strive to update inventory counts monthly, but just know your count will never be 100% accurate because the inventory workflow constantly changes.

“You want to do a count of each one of your trucks. You want to do a count of your warehouse. See where you're at, adjust, and bring it up to snuff,” Cossette says. “Because if your inventory is too skewed, then it's not going to be useful to you.”

And don’t make the same mistake Cossette did with setting up inventory management and conducting inventory counts on a weekday. If a job completes after you’ve done the count, your numbers will be skewed.

“Do it when things are as quiet as possible, either through an evening when all the trucks are back in the shop and all the jobs completed, or on a day your company is closed,” Cossette says. “Your inventory is essentially your backpack. If you don't have a good inventory count, then why are you doing inventory tracking in the first place?”

Counting inventory typically takes two to three hours, depending on the size of your warehouse.

Can I tackle inventory management with one step?

Not necessarily, but you don’t need to count every single nut or bolt in your warehouse. “Get with your management and see how far down the rabbit hole you want to get,” Cossette says.

You do, however, need to define the unit of measure for the items you’re tracking, Cossette says.

“Are you going to track it by bottle? Are you going to track it by pound? Are you going to track the screws themselves, like counting them one by one, or are you going to get boxes of screws and track what you take to know approximately what’s left in the box?” 

ServiceTitan’s inventory modules have no way of tracking the unit of measure, Cossette says, so he adds this information to the material description or inventory template.

And in order to adjust or add anything to your inventory, Cossette says you must issue all purchase orders through ServiceTitan. Then, make sure to train your field techs to enter all materials they used on a job to the invoice properly, so the system automatically syncs everything together. 

The bottom line

Utilizing an inventory management system to track inventory counts will never be 100% accurate all the time, Cossette says, but managing inventory is not an all-or-nothing type of process.

“Some might say, ‘If you're never going to get it 100% correct, why even bother?’ But having it 60% or 70% of the way there is much better than having it 0% of the way there,” he says. “At least you have an idea of how things are running.”

>>Mastering ServiceTitan is your guide to getting the most out of ServiceTitan. Each episode, ServiceTitan power users share their strategies and success stories to give you real, actionable advice on how to leverage ServiceTitan for your business. Whether you’re new to ServiceTitan, or have been on the platform for years, you'll hear how businesses just like yours have transformed their operations, improved efficiencies, and accelerated their growth.