• Small businesses can create barcodes in Excel using a barcode font such as Code 39 to avoid additional software costs.
• Barcodes enhance operational efficiency in many ways, like tracking inventory, organizing shelves, labeling documents, and managing pallets or containers. 
•  Implementing barcodes doesn’t require technical know-how and has minimal to no start-up costs. 
• Barcodes reduce human error, speed up processes, and improve customer satisfaction.
• While creating barcodes in Excel is a budget-friendly solution, it has limitations compared to specialized software like inFlow, which offers advanced barcoding and inventory management features.

It’s no secret around here how much we love barcodes. Few things provide the same amount of value and function when it comes to managing inventory. In addition to tracking product flow, barcodes are great for a myriad of other applications. For instance, you can use them for asset tracking, barcoding shelves, documents, and warehouse pallets or containers.

If you’re having an inventory-related issue, barcodes may help alleviate it. Small businesses, however, may find implementing them daunting. They require some know-how and a bit of extra hardware, but the truth is that just about anyone can implement barcodes at little to no additional cost.

For example, many small businesses create barcodes in Excel when they’re just starting out. You read that right– Excel. Today, we’ll be going over how to create barcodes in Excel and why it might make sense for your business. 

Why are barcodes so important? 

First things first, though: why? If we haven’t made that abundantly clear by now, the answer is simple: barcodes are incredibly useful.

For example, you can place a barcode on a warehouse shelf and code it to carry information for every product on that shelf. This can help employees locate products more quickly and increase customer satisfaction by reducing customer lead time. 

You can also use QR codes on documents to quickly link to valuable resources and information. This could significantly increase the efficiency of your shipping and receiving process, saving your employees time.

Another popular use case is LPN barcodes. These barcodes are placed on pallets, shipping containers, and other warehouse moveables and are integral to managing inventory in large, busy warehouses.    

In short, barcodes have many different uses. Their use cases are really only limited by your imagination. 

How barcodes in Excel work

Not all barcodes are the same. For example, a QR code is a type of barcode, but it’s distinctly different from the black-and-white stripes you see in stores. We refer to different barcode formats as barcode symbologies. Some of these symbologies are easily accessible through barcode fonts, and these fonts are how you create barcodes in Excel.

It’s as simple as installing your barcode font and then typing it in Excel like any other font. From there, you can create barcodes using alphanumeric characters. 

Why create barcodes in Excel?

Strange as it may sound, there’s a few reasons to create barcodes in Excel. For starters, it’s fairly easy and accessible to just about anyone. Businesses tend to use Excel for one thing or another, so it’s really just expanding its use case.

Investing in a new system or software is going to cost money. There’s no way around it. However, if you create barcodes in Excel, software you’ve already bought and paid for, you save on purchasing something new. This means you can start to get the benefits of barcodes at no added costs to your business.   

How to generate barcodes in Excel

First, you’ll need Excel (duh).

Next, you’ll need a barcode font. For this guide, we’ll use the Code 39 barcode font. This font initially only had 39 characters, hence the name. However, it has since expanded to contain up to 43 individual characters and is widely used for internal inventory management. We created our own free Code 39 barcode font, which you can download below. 

<div style="text-align: center;"><div style="text-align: center; display: inline-flex; flex-direction: column;"><a class="inflow-button" href="https://www.getdrip.com/forms/381769907/submissions/new" data-drip-show-form="381769907">Get the inFlow Code 39 font</a><span class="disclaimer">You are minutes away from typing out barcodes</span></div></div>

Installing and using the barcode font

Once you’ve downloaded the font, you’ll find two TTF files: machine-readable and human-and-machine-readable. If you want the characters to appear below the barcode when you type it out, you’ll want to download the human-and-machine-readable. Otherwise, you can download the machine-readable version.

Installing and using the barcode fonts works like any other font. Once installed, you simply select the font from the list of available fonts, and like magic, your keystrokes will now generate barcodes.

One thing to keep in mind when generating barcodes is that for a scanner to read them, you’ll need to start and end each code with an asterisk (*). These symbols are a way of telling the scanner when to start and stop reading the code. So, for example, if you want to create a barcode for M32D67G, you would need to type *M32D67G*.

Setting up your barcode generator in Excel 

Now that we have our barcode font ready, it’s time to create a spreadsheet in Excel that will act as our barcode generator. We’ll only need two columns: columns A and B. We’ll use column A to type in the characters of our barcode, and column B will be the cell that will generate the barcodes. The setup process looks like this:

1. Start by formatting column A so that it leaves numbers as plain text rather than equations or scientific notation. To do this, right-click column A and select “Format Cells”.
2. When the context menu appears, select the “Number” tab.
3. In the “Category” column, select “Number” and click “OK”.
4. To automate the process of putting asterisks on both sides of our text, we can enter the following formula into column B: =”*”&A1&”*”
5. Once you input the formula, apply it to the entire column. You can do this by selecting the relevant cell and then dragging down from the bottom right of said cell.
6. To finish your barcode generator, select column B and change the font for the entire column to the barcode font you installed.   

Important: We assume you’re also using columns A and B, but you can use any of them. You’ll need to adjust the formula, but that’s simple. For C1, replace A1 in the formula, F4 for F4, and so on. 

Creating your barcodes in Excel

Now that you have the spreadsheet set up, things are pretty simple. Whatever you type in column A should appear in column B as a barcode. And since we set the formula in column B to include the asterisks, we don’t need to worry about those in our codes.  

And that’s it! Now, you have a barcode generator in Excel. What codes you use for your products is really up to you. You may want to use random numbers and letters or build in some sort of naming convention. The important thing is that you connect those codes to your products in whatever system you’re using to track your inventory.    

What to do after you’ve generated your barcodes

Generating barcodes in Excel is great, but now what? Once you have your barcodes ready, you can print them out and attach them to your inventory. There are several options when it comes to barcode label printers, but if money is an issue, a standard office printer would work just fine.

The same goes for barcode scanners. While there are a number of options depending on your use case, the camera on a smartphone can also function as a barcode scanner. How the scanner functions will depend on which software you use with your barcodes. For example, if your inventory sheet is in Excel, a scanner could populate cells simply by scanning a barcode.

You can use the same function to search for a barcode in your Excel sheet. Just hit Ctrl + F to bring up the find menu and scan your barcode. It should populate into the text line, and from there, you can quickly look up the inventory connected to that barcode. 

How inFlow’s built-in barcoding system can help

Now that you know how to create barcodes in Excel, you can start to use them in your business. Keep in mind, though, that this isn’t a perfect solution. It gets the job done, but there are some inherent limits to using Excel as a barcode generator. 

It’s also worth mentioning that if you’re using Excel to generate barcodes, you’re also using it to track your inventory. While Excel is certainly an option for managing your inventory, when it comes to getting the most out of barcodes, it falls short.

Software solutions like inFlow offer inventory management with built-in barcoding functionality. Our software allows you to create detailed product listings that include all the information about your inventory, including pictures. We enable you to generate barcodes for your products and design custom barcode labels with our built-in label designer.

With inFlow, you get more than just a barcode generator. You get a full-fledged inventory management system at an affordable price.

The post How to Generate Barcodes in Excel for Inventory Management appeared first on inFlow Inventory.

• Automated inventory management systems use barcodes, real-time updates, reorder points, and integrations to reduce human error and increase speed.
• The benefits of automated inventory tracking include improved workflow efficiency, fewer errors, and improved demand forecasting.
• Key features in automated inventory management software include barcodes, perpetual inventory tracking, integrations, reporting, and reorder point notifications.
• Implementation involves identifying business needs, setting up automation like barcodes and integrations, and calculating reorder points.
• Automation will save businesses money through reduced labor requirements, faster workflows, and minimized errors.

AI and automation seem to be all anyone talks about these days, and as it turns out, there’s a pretty good reason for that. It’s hard to ignore the value AI and automation bring. These key features can help businesses through process automation, predictive analysis, and automated inventory management.   

So, today, we’ll focus on automated inventory tracking, including its benefits and what to look for when implementing an automated inventory management system. 

What is an automated inventory management system? 

Inventory management, in theory, is pretty simple: track products and assets as they move through your business. In practice, though, it’s much more complex. You’ll need to juggle many moving pieces, like sales orders, purchase orders, stock levels, price, inventory movement across multiple locations and sublocations, and so on.

Manually tracking these things is possible but usually inadvisable. Human error is a constant, and we are especially susceptible to mistakes when performing repetitive, menial tasks. Automated inventory management seeks to remedy this by using software to minimize the need for human input. Automated inventory management software achieves this through various means ranging from barcodes to automated reorder notifications.

Unlike humans, computers are great at handling repetitive tasks. They can also integrate with other systems, making them ideal tools for many different applications. 

What are the benefits of automated inventory tracking?

Automated inventory management has two main benefits: speeding up workflow and reducing human error. This is where barcodes shine. Scanning a barcode is much easier and faster than manual data entry, not to mention much more accurate. While barcodes may not be the most exciting automation available, they arguably bring the most value.

Scanning barcodes may only save you a few minutes here and there, but that time will add up quickly. Not to mention, barcodes work in a very binary way; they either scan or they don’t. Unlike manual data entry, where it’s easy for someone to make a mistake.

Automated inventory tracking is also a great way to protect your business from the unexpected. Inventory management software like inFlow has built-in reorder points, which means when your stock levels dip below a specific level, the system will send an automated notification to let you know it’s time to order more. 

Another incredible benefit is the data that inventory tracking yields. Automated inventory management software tracks sales as they happen, providing a comprehensive log of when they occur. Collecting this data will improve a business’s demand forecasting in the long term. These forecasts help guide business decisions and can also help identify cost-saving measures.

Key features for automated inventory software

Not every automated inventory management software functions the same, but unsurprisingly, they tend to operate on the same principles. In the same vein, there are some must-have features that any automated inventory management system should have (some of them we’ve already touched on).

Barcodes 

We’ve mentioned barcodes a couple of times already, and that’s because much of automated inventory tracking hinges on them. When an employee scans a barcode, the machine matches it to the relevant product within the barcoding software. This simple function allows you to automate several tasks, such as picking, stock adjustments, cycle counts, and more. Without barcodes, the efficacy of automated inventory management decreases drastically. 

Real-time tracking

Real-time tracking means that inventory information updates whenever a change occurs. Accurate assessment is crucial when making business decisions; real-time tracking always provides an accurate picture. This is particularly useful when your business operates from multiple locations. When you take something from one location, all other locations will be automatically updated. 

Integrations

These days, businesses often rely on multiple different software solutions to perform various tasks. For example, you might use inFlow for automated inventory management and QuickBooks Online to handle accounting and other financial information. It’s important that these systems can talk to one another, which requires a robust list of integrations.

For instance, inFlow integrates with QuickBooks Online, which automates two-way payment sync. This allows you to push payments from inFlow to QuickBooks Online and pull payments from QuickBooks Online to inFlow—no more double data entry.  

Reporting

Inventory management software stores quite a bit of data. It collects sales information like quantity, date of sale, price, and so on. This data is super helpful, but organizing and analyzing it in a meaningful way can be tricky. Thankfully, automated inventory management software will handle the grunt work for you. As a result, all you need to do is click a button to generate various reports easily. 

Reorder point notifications

Inventory drives revenue—without inventory, there can be no purchases. That means you’ll need to stay on top of your inventory levels to avoid potential stockouts. Reorder points are a great way of automating this process. They ensure you maintain the perfect balance of stock to prevent both stockouts and carrying excess inventory.

How to implement an automated inventory system

If you’re looking to implement your own automated inventory management, it’s important to remember that your needs are unique. Even businesses operating in the same sector or niche may have different procedures. For that reason, we can’t offer a perfect guide to finding a solution, but we can provide some general steps. 

First, identify your business needs. Are you looking to improve the accuracy of your stock level records? Are you trying to reduce inventory shrinkage, or is there something else entirely? Your business needs will ultimately decide the ideal solution, so it’s important to know what exactly you need while looking. 

Once you find an automated inventory management solution with all the features you want, you’ll need to set up your automation. This step is easily the most time-consuming but is a one-time process. Once you’re set-up, you should be good to go for a while. 

If you plan to use barcodes, you must generate, print, and label all your inventory. To use reorder points, you’ll need to calculate them for each of your products. If you’re interested in integrating your various software solutions, you’ll need to go through the process of connecting your software solutions. 

Does it save money for small businesses?

Short answer: yes.

While automated inventory management software often has a recurring cost in the form of a subscription, it still saves money in the long run. This is mainly because it dramatically reduces the need for staffing. Labor is expensive, and reducing workforce requirements while allocating it elsewhere is a tremendous boon. 

This is without taking into account additional costs incurred by human error. Human error can be exorbitantly costly, and avoiding it as much as possible is yet another reason to favor automated inventory tracking. 

The post Avoid Costly Mistakes with Automated Inventory Management Software appeared first on inFlow Inventory.

• You can create a barcode using a free UPC barcode generator, but it will not be genuine.
• Universal Product Code, or UPC, refers to barcode symbology used in North America and other parts of the world.
• A UPC barcode is encoded with a Global Trade Item Number (GTIN) through a not-for-profit organization known as GS1.
• GS1 is the sole provider of globally accepted UPC barcodes. 
• Most retailers, like Amazon and Walmart, require a product to have an active GTIN encoded into the UPC. 
• It’s best to avoid UPC barcode resellers to avoid potential legal issues.

Since the explosion of ecommerce in the past decade, products have been getting into the consumer’s hands in record time. Anything we could ask for is just a few clicks away from being at our doorstep within 24 hours. Many contributors make that possible, but a major one is barcodes. They streamline the entire supply chain by making inventory management quick, easy, and more accurate. Despite their importance, however, figuring out how to actually obtain them can be confusing– and a bit headache-inducing. 

Today, we’ll be going over what Universal Product Code (UPC) barcodes are, why they’re so crucial for modern businesses, and other things, such as whether or not you can use a free UPC barcode generator. 

Why are barcodes so important?

The average consumer only regularly sees one use of barcodes: to tally up their total at checkout. And while that’s undoubtedly one of their primary use cases, they offer much more behind the scenes.

Barcodes are great for tracking inventory levels, keeping an eye on asset usage, and you can utilize LPN barcodes to enhance your warehouse management. You can even use barcodes on shelves and documents. The possibilities are endless. However, because they keep track of sales, they’re also an essential part of accounting. 

They’re not quite a necessity– some businesses that primarily offer services, for example, may not need them. However, most common services like electrical and plumbing often need to track their components and equipment internally. 

In short, they’re a critical component of running a modern business. There’s a reason practically every business under the sun uses them– things are just more difficult and time-consuming without them. 

UPC barcode definition

For starters, lets go over what is a UPC barcode. A UPC barcode refers to a specific barcode symbology businesses in North America and many other parts of the world use on their products. You’ve almost certainly seen one of these barcodes somewhere; they’re on basically every item in every store. These barcodes are encoded with a Global Trade Item Number (GTIN), registered by GS1 (more on GS1 below).  

Now, if you search “UPC barcode generator,” you’re bound to find a few online barcode generators that are totally free to use. Technically, there’s nothing wrong with using these barcode generators; you’ll undoubtedly get a UPC barcode from them. However, the barcodes they produce won’t be authentic. This means they won’t be registered with GS1 or recognized globally by other organizations.  

Most popular retailers require products to have officially registered UPC barcodes for their products to ensure their authenticity. Even online retailers like Amazon and Walmart require them for products to be listed on their sites.

Who is GS1?

Now, you’re probably wondering: Who is GS1, and why do they matter? GS1 is an essential figure in the business world—it is the only official global provider of UPC barcodes. That might seem strange, considering that most markets try to avoid monopolies, but GS1 is a not-for-profit organization, and they’re not doing this to line their own pockets. They aim to bring standardized systems worldwide. Of course, barcodes are a significant part of that. 

Nowadays, the global supply chain involves hundreds of different countries. Imagine if every country developed its own barcodes independently of one another. This would make it incredibly difficult to maintain the supply chain and make collaboration nearly impossible. The role of GS1 is to ensure that everyone is on the same page regarding processes, including barcodes.

Do free online UPC barcode generators work?

Plenty of tools online claim to be free online UPC barcode generators. However, the reality is that the UPC barcodes generated by these tools lack the most critical component that makes UPCs valuable, and that’s the GTIN.

If you use an online UPC barcode generator, your barcodes will work fine within your barcoding software, but that’s about it. If you’re just generating barcodes for in-house use, then there’s no real problem with that. However, if you want Amazon, Walmart, and other large retailers to recognize them, you need to go through GS1. 

Where to find an authentic UPC barcode generator?

There’s a few different ways to get your hands on authentic UPC barcodes. The easiest, most obvious way is to order them straight from GS1. When you purchase from GS1, you have two options: buy them individually or license them under a company prefix. Depending on how many barcodes you license, both the initial and annual fees will vary. For 1-10, there’s a $250 initial fee and $50 annual. 1-100 is $750 and $150 respectively. To 1,000, it’s $2500 and $500. The prices continue to increase at both 10,000 barcodes and 100,000 barcodes. 

Licensing under a company prefix has benefits, most of which apply to businesses operating in multiple locations and/or countries.

Alternatively, you can use a UPC barcode generator from authorized partners. inFlow’s GTIN barcode shop is the easiest way to purchase retailer-ready UPC barcodes. Just enter your product and company information, and head to check out—no renewals– just a one-time $30 fee per barcode.

What about UPC resellers?

It’s best to avoid UPC resellers for several reasons. First, they may be illegally selling you something they do not own. The only UPC barcodes that can be legally resold are those created before the 2002 lawsuit.

In 2002, the Uniform Code Council, or UCC, who would later become GS1, lost a class action suit. As a result, the owners of any barcodes before 2002 can legally sell them. And to be clear, there’s a ton of them out there. However, they don’t count as an active license, meaning retailers like Amazon and Walmart won’t accept them. 

And then there’s also the illegal part of things. If the barcode doesn’t fall into that category, it’s a registered business asset belonging to someone else. That means it’s something they can’t legally sell you, and you can’t legally use it either. 

Getting all UPCs directly from GS1 or authorized partners like us is the best option. While there is a small initial investment, it will save you massive headaches down the road.

The bottom line is that GS1 is the only true UPC barcode generator.

The post Understanding UPC Barcode Generators and How They Work appeared first on inFlow Inventory.

• A fixed-price contract (also called a fixed-cost contract or fixed sum contract) sets a price from the beginning; no matter what, that will be the final payment. 
• While risky, they offer small businesses who know their craft a chance to make a great profit while giving their customers peace of mind. 
• Profiting from a fixed-price contract requires accurate demand forecasting and intimate business knowledge. 
• Fixed-price contracts are not suitable for every business project. Generally speaking, they are a good fit for smaller, less complex projects with a clear scope of work.

Contractors have to deal with a lot of contracts. It’s in the name, after all! While these contracts generally share the same goal of defining payment for a project, they can differ significantly in structure. One of these types of contracts is the fixed-price contract or fixed-cost contract. 

It’s common in many field service industries, such as construction, HVAC & plumbing, electrical, telecom equipment installation, etc. Today, we’ll be going over what a fixed-price contract is, when they’re useful, and when it might be better to consider a different type of contract. 

What is a fixed-price contract?

As the name suggests, a fixed-price contract is a contract that stipulates the final payment from the very beginning. Unlike many other contracts, there’s usually no room for negotiation once the agreement is in place. It also provides no extra payment for unforeseen costs, like additional resources or manpower. 

For this reason, fixed-price contracts leave little wiggle room for error. These types of contracts can be very attractive to the client/consumer since they offer them peace of mind. However, the contractors take on a massive risk if they’re not careful with their planning and budgeting.  

What are the benefits of fixed-price contracts?

On the surface, lacking breathing room and a safety net might seem like a bad idea. But fixed-price contracts have their benefits. 

The biggest advantage of these contracts (sometimes called fixed-cost contracts or fixed-sum contracts) is that they’re straightforward to understand. The buyer makes the final price clear from the start, and it’s up to the contractor to break it down. In many cases, that’s much easier than accounting for every cost along the way. It also cuts down the back-and-forth negotiations, which can expedite other processes. 

Because of this, fixed-price contracts can also be exceptionally profitable. Businesses who know their work inside and out can often deliver the final project under budget, which means more profit in their pockets.

As we mentioned before, customers often prefer fixed-price contracts for the transparency they provide. Service providers like them because of how they incentivize more efficient workflows. 

What are the downsides of fixed-price contracts? 

Of course, there are downsides to every contract, and a fixed-cost contract is no exception. That’s part of why there are different types of contracts. Different projects and jobs often require different guidelines for both parties. 

The biggest problem with fixed-price contracts is that markets are dynamic. Even the most stable markets see some price fluctuation, however slight. Depending on the project, an increase of even a few cents can equate to hundreds or thousands of dollars. 

Unforeseen costs present another, even larger issue. It’s no real secret that sometimes, things just don’t go according to plan. That’s just part of life. But, unfortunately, when things go awry for contractors, it usually means they’re losing profit. Extraordinarily dire circumstances may also lead them to lose money on jobs if they’re under a fixed-price contract. For this reason, businesses should consider these contingency costs beforehand and bake them into the contract. 

When should (or shouldn’t) you use fixed-price contracts? 

Generally speaking, it’s best to use fixed-sum contracts when the scope of work is clear. But what does that mean? 

Above, we mentioned a few different field service sectors where such contracts are popular. These sectors can typically define the scope of work beforehand. For example, a client may prepare an RFI, RFQ, or RFP, depending on the project stage. This allows contractors to do all the necessary number crunching to see how much they’ll need to complete the project based on past projects. By extension, this will enable them to work out roughly how much profit they’ll make. 

Fixed-cost contracts are generally a bad idea when dealing with fluctuating markets. If the cost of project materials rise and falls quickly, it becomes near-impossible to determine price and profit.

Another consideration is the complexity of the project at hand. In general, more complicated projects will have more unforeseen costs added on. For example, aerospace company Boeing says it’s unable to make money with fixed-price contracts. A large part of this is due to their Starliner program, and the high number of complex variables. 

Lastly, large-scale projects can be tricky to manage under fixed-sum contracts. Large projects generally take more time to complete, increasing the odds that something goes wrong along the way. You’ll also be dealing with more materials; even slight miscalculations could end up costing you thousands.

What other contracts should I consider? 

Sometimes, a fixed-price contract is just a bad idea. That’s the nature of doing business. In these instances, it’s better to consider another type of contract. Here are some examples: 

• Guaranteed maximum price (GMP): as the name suggests, this contract stipulates a maximum price. It’s similar to fixed-cost contracts because there’s a set price from the beginning. However, completing a project under the maximum price doesn’t mean you’ll receive the rest as profit.
• Cost-plus: in cost-plus contracts, the buyer pays the contractor for project costs and a predetermined profit margin. For example, let’s say that a cost-plus contract stipulates a 15% profit margin and that the project took $250,000 worth of materials to build. This would mean the total contract cost would be $287,500 ($250,000 x 1.15 = $287,500).
• Time and materials: under time and materials contracts, the contractor bills for material costs and labor at an hourly rate. This is the most straightforward and traditional type of contract. 
• Unit price: this one is a bit tricky. Unit price contracts divide labor into “units”, and assign a price to each unit. It’s generally used for projects that repeat the same thing over and over, like apartment buildings. 

How do fixed-price contracts affect inventory management? 

Let’s say you’ve decided to use a fixed-price contract for your next project. Operating under this type of contract introduces some challenges, mainly regarding materials, which is why proper inventory management is critical.  

It’s important to reduce lead time as much as possible when sourcing materials, so having proper reorder points can be a lifesaver. Reorder points will ensure you have the necessary materials on hand when you need them while avoiding the costs associated with holding excess inventory. If you experience a delay in materials, you’ll risk prolonging your timeline, which will mean less profit. There’s also an opportunity cost to spending too long on a project, and the longer it takes, the more you’ll miss out. 

Other important factors are budgeting and material sourcing. These two go hand-in-hand, as the budget is what allows contractors to purchase materials in the first place. Many contractors will buy the materials all at once to make budgeting easier. If prices go down soon after, there will be some profit loss, but it’s often better to plan ahead, mainly because the inverse is also true. Material prices can rise as quickly as they fall, leading to even greater profit loss.

Understanding your projected project costs is all about analyzing your historical data. Businesses can use the information they have from past projects to help inform their decisions on future projects. 

Implementing fixed-sum contracts successfully 

No contract is perfect; learning what works for your business can involve trial and error. However, you can mitigate early growing pains by adopting best practices early on. 

It’s important to remember that, under fixed-price contracts, the contractors assume all of the risk. It’s up to them to budget things accordingly to deliver on time while also making a profit. Deciding whether a fixed-price contract makes sense requires intimate operations knowledge. It is crucial to have a concise understanding of how quickly you can finish the project and how many materials it will take. 

Similarly, accounting for market shifts is vital, especially if you purchase materials in batches. Not accounting for price shifts and material availability are some of the most common reasons contractors lose money. 

The best way to remedy most of these challenges is to use field service management software, like inFlow. We developed our software to be the perfect companion for businesses using all different types of contracts. Our reorder point notifications make staying on top of your stock levels easy. We have all kinds of reporting features, allowing you to look at material costs on past projects quickly. Our built-in barcoding feature will help automate your most tedious and time-consuming tasks. And if you’re in the US and Canada, inFlow can even take payments online. 

So, no matter what type of contract your business uses, inFlow is here to help.

The post Navigating Fixed-Price Contracts: A Contractor’s Guide to Success appeared first on inFlow Inventory.

• Barcodes for manufacturing have various benefits, such as improved shipping and receiving, end-to-end traceability, better equipment management, and cost tracking.
• Manufacturers should only consider GS1 barcodes for finished goods
• You can create free, custom barcodes for internal tracking of components and assets.
• Flexible barcode creation options include barcode fonts, generators, or integrated software.
• A functional barcode system requires barcodes, a scanner, a printer, and software.

We may not realize it, but behind the scenes, barcodes play an essential part in our everyday lives. They’re a vital part of the global supply chain, ensuring the smooth flow of goods from the beginning of the product journey til the end. It’s not an exaggeration to say that the supply chain would simply not function as efficiently as it does today without barcodes. 

While it’s true that most businesses can benefit from adopting barcodes, manufacturers, in particular, stand to benefit the most. But why is that? And what should you, as a manufacturer, keep in mind when implementing barcodes for manufacturing?

Why are barcodes for manufacturing important?

Simply put, manufacturers use barcodes for more things. For example, retailers typically use barcodes to track product stock levels and inventory movement. Some may also use them for a handful of other use cases, such as barcoding on shelves, documents, or expensive business assets.

On the other hand, manufacturers need to track all that and more. The manufacturing process generally has more moving parts than the average retailer. Manufacturers need to source a variety of different materials and components, keep track of what they use and don’t use, and track what stage of the process individual components are in. A barcode tracking system lets them keep track of that process in real-time.

In short, there’s a lot of moving pieces, and using barcodes makes it easier to track everything. Luckily, most inventory management systems include some sort of barcode functionality. So, chances are, even if you’re not using barcodes yet, you should be able to get started with them quickly enough. That’s assuming you’re using the right barcode manufacturing software. 

Using a barcode system isn’t outright necessary, but lacking one can be crippling, as competitors will have a distinct advantage. 

The benefits of barcodes for manufacturing

Manufacturers who utilize barcodes will see several benefits across their organization. Some of the major advantages are:

• Tracking stock levels – barcodes help monitor stock levels in real-time, making it easy to track raw materials, work-in-progress (WIP), and finished goods.
• Improved shipping and receiving – barcodes help streamline the pick-pack-and-ship workflow and make shipping and receiving fast and easy. 
• Traceability – barcodes provide end-to-end traceability so you can easily track all your components as they travel through the manufacturing process.
• Equipment tracking – manufacturers can use barcodes to manage expensive equipment and machinery, ensure it’s always where it should be, and monitor its state of repair. 
• Cost tracking – accurately tracking cost of goods manufactured (COGM) is among the most essential things a manufacturer can do, and barcodes make this process much simpler.

Do manufacturers need registered GS1 barcodes?

There are a few ways to get barcodes for manufacturing. The “official” way is to purchase them through GS1. They’re a non-profit business entity that seeks to connect places around the globe using the same barcode language. If manufacturers make their own unique product in-house, it’s a good idea to register it with an official GS1 barcode. 

With that said, that doesn’t mean manufacturers need to use GS1 barcodes for the whole process. If anything, it’s a bad idea. 

The reality is that GS1 barcodes are great for product authenticity and traceability and are a requirement if you want to sell your finished goods in major retail stores. However, there is no need to use them throughout the manufacturing process. You should reserve GS1 barcodes for finished products that are ready for sale.

So what about all the other barcodes you’ll need? You’ll be happy to hear you can make those barcodes in-house completely free! Here’s how.

How do you create barcodes for manufacturing?

Unlike GS1 barcodes, when you create your own barcodes, they won’t be recognized by any outside organization. This means the only barcodes that matter to the outside world are the ones on your finished products. So feel free to create custom barcodes for all your components, assets, shelves, and anything else you want to track internally. 

You have a few options to create barcodes for manufacturing:

• Barcode font – A barcode font isn’t much different from any other font you see in Word or Google Docs. Instead of changing the style of letters and numbers, a barcode font takes alphanumeric characters and translates them into barcodes.
• Barcode generator – A barcode generator is a tool used to generate barcodes in various barcode symbologies. Many free barcode generators are available online, each with varying functionality. 
• Barcode manufacturing software – If you use barcode manufacturing software, chances are there may be a built-in barcode generator. For example, inFlow allows you to quickly generate barcodes of various symbologies with the click of a button. You can even create QR codes!

Where should you use barcodes?

The great thing about barcodes is just how versatile they can be. Manufacturers can use barcodes for many things, including barcoding components, shelves, documents, assets, finished products, etc. LPN barcodes, for example, are used by manufacturers to track the contents of large moveable bins. 

Manufacturers can use barcodes for their subassemblies and all of the components that go in a bill of materials (BOM). The bill of materials is a recipe that lists all the components that go into manufacturing a finished product. It’s a crucial tool for any manufacturer, and using barcodes to collect the necessary components for a BOM will increase speed and accuracy. 

The possibilities are endless when it comes to barcodes for manufacturing! 

What will you need to get started?

Using barcodes for manufacturing is essential for modern businesses, but the barcodes themselves are just one part of a system. You’ll need a few more things to get up and running. Every barcode system has four key components: barcodes, scanners, printers, and barcode manufacturing software.

In terms of a printer, any office jet printer will do if you’re looking for the cheapest option. Still, we recommend investing in a dedicated label printer for high-volume printing environments. For a scanner, you can get by using your smartphone if money is an issue. But if you’re scanning a lot, investing in a barcode scanner is best. There are many different options for both of these, so we recommend reading our articles on barcode scanners and printers to better understand which one would be right for you. 

Wrapping up

While there are new technologies that seek to improve on barcodes, at the time of writing, they’re prohibitively expensive. Barcodes remain the primary method that manufacturers use to track their workflow and material/component levels. That won’t be changing anytime soon.

The post Barcode System for Manufacturing: What You Need to Succeed appeared first on inFlow Inventory.

• Companies use an LPN barcode in logistics to track and trace.
• LPN stands for “license plate number.”
• Businesses place LPN barcodes on warehouse moveables like crates and pallets to track them more efficiently.
• Warehouse managers often use moveables as a means of categorizing products. 
• The workflow requires standard barcoding equipment: Barcode generator, scanner, printer, and software.  

Warehouses are a common pain point for businesses. In other words, they’re large, expensive, and require a lot of resources to maintain. At the same time, though, warehouses are a piece of critical infrastructure. They provide storage space for products and are ultimately responsible for getting orders out the door.

Consequently, an optimized warehouse means an improved customer experience, which can give one company an edge over the others. 

To improve operations, warehouse managers use many tools for inventory management, a popular one being LPN (license plate numbers) barcodes. Barcodes are an outright necessity in modern-day business and have countless use cases across various industries. An LPN barcode is one of those use cases. So: what are LPN barcodes? How can they help businesses improve warehousing processes? 

What is an LPN barcode?

Despite the name, an LPN barcode doesn’t actually have much to do with license plates. Businesses attach an LPN barcode to a larger, movable object, like a crate or pallet. They then use these barcodes to track the moveables as they travel through the warehouse. 

The barcodes themselves make use of the same technology as other barcodes. They store information by encoding it into a series of black-and-white stripes. Barcode scanners can read these patterns and translate them into human-readable data. 

In that sense, an LPN label is more of an organizational tool than anything else. It’s just a different application of already existing technology.

Why do businesses use LPN barcodes?

Warehouses are very often an organizational nightmare. The average consumer might picture neat lines or shelves of products, but that’s far from the case. Space is expensive, so businesses have a vested interest in using it as efficiently as possible. That means stacking products all the way to the ceiling, which often necessitates heavy equipment like forklifts.

All of this space and equipment, in turn, necessitates more employees, which can create a very chaotic and stressful environment. Notably, the warehouse industry sees a 49% turnover rate in the US– and 150% for Amazon. We won’t make any claims about the warehouse industry, but the chaotic work environment likely plays a role. 

From the perspective of a business, a chaotic work environment is a liability. It might sound ridiculous, but misplacing a pallet or crate in a building as large as a warehouse is easy. That’s why they use LPN barcodes. Unlike typical barcodes, which are tied to individual products, an LPN barcode identifies a “container.” These containers may contain multiple items with various SKUs and are an excellent way for businesses to help organize their warehouses. 

Amazon LPN barcodes

The most notable company to use LPN barcodes is Amazon. In fact, it’s to the point that their almost synonymous with the company. Many people call them an Amazon LPN label, or an Amazon LPN barcode. And that’s true– Amazon does make regular use of an LPN barcode system. However, it’s a little bit different. 

Up above, we illustrated just how chaotic the warehouse environment can be. Amazon is the single largest online retailer in the world (and the second largest retailer, period), and their warehouses are much larger and more chaotic.

This means the amount of product traffic is higher than average– both in and out. In 2021, the National Retail Federation estimated that 21% of all online merchandise during the holiday season was returned. That’s a lot of returns. 

One of the ways Amazon uses LPN barcodes is by separating returns as they arrive. This sections off returns from shipments and provides a physical way of tracking returns. Amazon operates on such a large scale that mistakes are commonplace. Their use of an LPN barcode system helps reduce mistakes and increase visibility.

What does a business need to implement LPN barcodes?

There are four necessary components to any barcode system. An LPN barcode system is no exception. Your business will need the following: a barcode generator/designer, a printer, a scanner, and barcode software. 

The barcode generator creates barcodes, the printer… prints them, the scanner reads them, and the software ties them all together. If one of these components is missing, things fall apart. It’s important to remember that barcodes are a simple but powerful business tool. Whoever uses them dictates their usefulness, but the key requirements don’t change. 

LPN barcodes best practices

If you, as a business owner, are looking to implement LPN barcoding, here are some best practices to consider beforehand. 

Make LPN labels accessible  

As with any barcode, it’s important to place it somewhere employees can easily access it. While that’s the most important requirement, it’s also far from the only one. It needs to be easy to find, hidden from the elements, and ideally does not require external tools (like a flashlight) to read.

Make LPN barcodes obvious

At the end of the day, businesses use LPN barcodes to separate equipment or products. Meanwhile, some even use LPN barcodes as a way of marking products that are close to expiring. Many businesses do this by directly marking the physical barcode with “LPN.”

Tune the system to your work, not the other way around

The usefulness of barcodes depends on the implementation. LPN barcodes are meant to streamline warehousing processes. It’s important to tune the system to your work instead of changing a business to suit the system. The system itself is malleable– with a little creativity, a solution will arise.

Create a sorting method

Like any inventory management technique, LPN barcodes are only as useful as you make them. With that in mind, settle on a sorting method that makes sense for your business. For instance, you could use an LPN label to store products that sell well together, or you could use them to store products deemed deadstock. The choice is yours. 

Final thoughts

An LPN barcode is really just a barcode at the end of the day, and it does what they all do. It stores information. In this instance, though, businesses often use them to separate a certain class of product or equipment. Using them can streamline warehouse processes or open the door to new organizational methods.

The post A Step-by-Step Guide for Implementing LPN Barcodes appeared first on inFlow Inventory.

• MRO inventory stands for maintenance, repair, and operations.
• It’s a specific class of inventory that refers to materials and supplies used to keep business operations running. 
• MRO inventory is not a part of the final product.
• Properly managing MRO helps a business operate more efficiently and increase profits. 
• Poorly managing MRO can cause a loss in profits due to downtime, production issues, and unsafe working conditions. 

When you’re running a business, you’ll need to manage a lot of different types of inventory. Most companies focus most of their attention on product-related inventory, such as raw materials, components, and finished goods. But there’s another type of inventory that’s just as crucial to keep everything running smoothly: MRO inventory. 

MRO inventory (maintenance, repair, and operational), which encompasses supplies, tools, and equipment, plays a crucial role in any business. It ensures that operations stay on schedule and productivity remains as high as possible. So, what is MRO Inventory? What role does it play, and why is it important? And how should businesses manage it? Let’s look at this often-overlooked inventory type in more detail.

What is MRO inventory?

It’s fairly easy to guess what the MRO meaning is. Also called MRO supplies, it refers to inventory a business uses during production. There’s a caveat, though: MRO inventory can’t be part of the final product. Anything used during the production process that becomes a part of the finished product would be considered raw materials or components. 

For example, take an electronics manufacturer that specializes in semiconductors. The assembly of the semiconductors requires various metal pieces, silicone, and epoxy. It also requires personal protective equipment (PPE) and tools to assemble the pieces. In this example, the raw materials are the metal pieces, silicone, and epoxy; the PPE and tools are the MRO inventory.

However, MRO inventory doesn’t just relate to things directly used in the production of the semiconductors. A plethora of other things that assist in business operations also fall into this category. For instance, scales, pallet jacks, and machinery would also qualify as MRO inventory.

These items are essential to the production process but absent from the final product. As a result, we can classify these products as MRO supplies.

MRO inventory examples

There are a slew of things that can be considered MRO inventory. It really depends on what type of business you’re running. Manufacturers tend to have more MRO inventory to worry about, but make no mistake; every business has MRO inventory. Here are some common examples of MRO inventory:

• Consumables – Cleaning supplies, light bulbs, and cleaning solutions.
• Maintenance supplies – Lubricants, tools, cleaning equipment, and janitorial supplies.
• Operational supplies – PPE, printer paper, printer ink, staplers, paper clips, and other office supplies
• Repair parts – Motors, gaskets, springs, seals, filters, and any other replacement parts needed for equipment. 

Generally speaking, businesses can break down MRO inventory into three categories:

• Production MRO – All parts, tools, and equipment necessary to keep processes running would fall into this category. 
• Administrative MRO – This category is for any items used in the day-to-day business operations, such as office supplies and IT hardware. 
• Facilities MRO – Any items used to maintain your place of business belong in this category. This includes things like light bulbs and safety systems.

Why is MRO important?

New businesses or companies tend to overlook MRO inventory. In some ways, it’s understandable. After all, it doesn’t generate revenue, so why spend time and resources on it? Well, because it does generate revenue. Just not directly. There’s a famous saying: “A penny saved is a penny earned.” 

It’s a saying that applies to running a business. Saving a penny on overhead costs is just as good as earning an extra one. Properly managing MRO inventory is what gives a business the ability to operate in the face of suboptimal conditions. 

Properly managing MRO inventory will ensure your business is always running smoothly and prevent unnecessary downtime. 

What are the benefits of proper MRO management? 

Companies who take the time to manage their MRO supplies see quite a few benefits. We briefly touched on some already, but here’s a more detailed explanation of the benefits. 

Workflow efficiency 

Staying on top of MRO inventory generally leads to higher efficiency. While mistakes and accidents will inevitably happen, mitigating the effects goes a long way in increasing efficiency.

Cost reduction 

At the end of the day, MRO inventory is just that: inventory. And as a result, properly managing it can cut operating costs. However, purchasing MRO supplies and adequately managing them can be tricky. More on that later. 

Longer equipment lifespan

Generally speaking, when you keep up with the maintenance of your facility, equipment, and tools, you’ll increase their life span. While it may cost more money in the short term, it’ll pay off in the short term. Think of it as an investment in your business. Properly maintained equipment also operates more efficiently, increasing overall productivity. 

What are the consequences of neglecting MRO inventory?

Depending on the industry and manner of products/services provided, there are many possible consequences of neglecting MRO supplies. They can range from delays and downtime to lawsuits and a total shutdown. 

Let’s go back to our imaginary electronics company. Say the facility runs out of PPE supplies, and rather than shut down production, the company opts to keep things running. As a result, during production, a mishap leaves one employee with an injury. Something small like that could severely damage the company, not just financially but also its reputation. Not to mention, depending on the industry, neglecting equipment may also go against regulations, which could be grounds for hefty fines or worse. 

A more innocuous example would be if your business ran out of light bulbs. While it may seem like a silly inconvenience, it would make it hard for staff to work effectively in the dark. 

MRO best practices

Like any other inventory management endeavor, properly managing MRO supplies can be challenging. For starters, traditional forecasting methods, like market trends and customer demand, don’t apply to MRO inventory. However, that doesn’t mean there aren’t some best practices you can follow. Here’s a few to help out. 

Classify and rank MRO inventory 

Not every MRO product is of equal importance. For example, fixing equipment is more important than repainting it. Figuring out which MRO inventory is more important than others lets businesses prioritize mission-critical equipment above all else. Over time, companies can use this data to help them create a restocking cycle. 

Implement safety stock and reorder points

Knowing limits is important. Especially when it comes to MRO supplies, it’s best to purchase as little as possible, while ensuring you don’t run out of stock. To do this, choose realistic reorder points and safety stock levels for your MRO inventory. Remember, MRO inventory should still follow the same basic principles of inventory management, so you should always consider safety stock and reorder points. 

Know seasonal trends

The seasons affect most inventory in one way or another. For example, certain times of the year may require longer hours and more production time. This, in turn, will lead to more wear and tear on equipment, which means you’ll need more replacement parts. 

Make decisions based on data 

Most businesses collect a wide variety of KPIs (key performance indicators), ranging from sales volume to customer information. You may not be able to rely on sales data to predict your MRO inventory needs, but you can still look back at historical data. If you examine what you used in the past, you can better predict what you’ll likely need in the future.

Use software where possible

Before the digital age, everyone had to keep track of things by hand. The accessibility of computers has changed that. Now, software helps businesses across the globe with a variety of tasks. Our inventory management software inFlow can help track MRO inventory in real-time, and it offers integrations with other popular software solutions like QuickBooks Online and Shopify. There is also a built-in barcoding system that helps automate a ton of the work related to managing your MRO supplies.  

Conclusion

While often overlooked, MRO inventory plays a crucial role in nearly every business. It plays an indispensable role in ensuring that your business operations continue to run smoothly. Properly managing MRO inventory will minimize downtime, improve efficiency, and help control costs. In a world where time is money, effective MRO inventory management can provide your company with a strategic advantage.

The post MRO Inventory Best Practices for Small Businesses appeared first on inFlow Inventory.

• Understanding how to forecast sales is crucial for proper inventory management.
• Sales forecasting is a method of predicting future sales using historical sales records and other available data.
• There are many different methods of sales forecasting. 
• Each method considers a variety of different factors & data.
• Knowing how to forecast sales will save you storage space, prevent stockouts, and lower the excess inventory you need to carry.

Something new business owners quickly learn is the importance of knowledge. Not just in running a business but in terms of data. It may seem like a peripheral task, but gathering data over time and analyzing it is key to long-term success. 

One of the most important pieces of data analytics is sales forecasting. Knowing how to forecast sales keeps overhead costs low and lets businesses commit resources elsewhere. Holding the right amount of inventory can also increase profits in the long run. 

The long and short of it: knowing how to forecast sales is crucial. It plays a part in determining revenue and can decide whether a business stays afloat. So, what is sales forecasting? How does it help businesses? Is there more than one way to sales forecast? What does the process look like? 

What is sales forecasting? 

For the most part, the term is self-explanatory. Sales forecasting is the practice of predicting future sales numbers across a specific time period. While this is a simple concept, calculating the correct number requires a lot of data. A wildly inaccurate sales forecast can also cause severe issues, so it’s best to invest the proper time and care.

Why is knowing how to forecast sales important? 

A sales forecast does a lot to help a business, but it also plays a significant role in deciding their overhead costs. Consumers tend not to think about it much, but every product on a retailer’s shelf comes at a cost. It costs them money to purchase it, and its presence takes up physical space. That product also has an opportunity cost: having item A means you can’t have item B there. 

For now, though, we’ll focus on the per-unit cost. Many retail products are relatively inexpensive, but retailers purchase them in bulk. For example, let’s say a retailer purchases a product for $3. Buying 100 isn’t a huge problem: it’ll only cost $300 for the lot. 

Let’s crank that up to 10,000 units– which is actually very little by retail standards. Suddenly all of that costs $30,000. Assuming the business sells all of those units, they’ll still make a profit. But if they only sell half, they now have $15,000 worth of products they can’t sell. That’s effectively a considerable loss. Forecasting sales properly helps avoid these issues. 

What affects sales forecasting?

Before a business can begin sales forecasting, it needs to identify what factors to consider– and there are a lot. It’s possible to control some of these factors, but not all. For example, manufacturing quality is ultimately something a business can control. On the other hand, they have no control over the change of seasons. 

With that said, a common pitfall is trying to account for everything. There will always be something that will influence your business that you will have no control over. That’s just the way it is. Accounting for minor influences can throw off more complex calculations and lead to bad decisions. So, be weary before you build any contingencies into your sales forecast. 

Popular sales forecast techniques

There are quite a few different ways of forecasting sales. This is partly because very few products are identical in every way. They solve different problems in different manners, and as a result, appeal to different audiences. Therefore, no matter how closely you think the two products are related, they may require a different technique. Here are some of the most popular methods for sales forecasting. 

Length of sales cycle 

This method uses previous customer data to predict how long it will take for potential customers to purchase a product. This calculation uses many different customer data points, such as lifetime value, location, and customer segmentation.

Historical method 

Historical forecasting uses historical data to make predictions regarding future sales. While popular in retail, the banking and finance industries also regularly use it. It’s best to use this method when analyzing metrics across a long period of time. For instance, a business that sells seasonal sporting equipment may track performance over several years to predict future sales. 

Multivariable method

Multivariable forecasting models seek to create an accurate forecast by considering a wide variety of factors. For example, they consider competitor activity, product launches, seasonal performance, and customer demographics.

Opportunity stage

This method considers customer pipelines and open opportunities to predict demand. This means factors like product popularity, competitor popularity, market trends, and customer sentiment. Generally speaking, companies with longer sales cycles like subscription models use this method. 

Lead value 

This method of sales forecasting uses lead generation data to predict future demand. These calculations draw from various factors like past purchases, general interests, and customer demographics. 

Intuitive forecasting

We’re going to start this one off with a quick disclaimer. Most businesses shouldn’t use intuitive forecasting. It’s a method that relies more on the analyst’s general sentiment or feelings, rather than backed by hard numbers. While uncommon, it does still have a place. For instance, if you just started doing business and don’t have much data to draw from. That said, the chance that the average business will need this is slim. 

Common challenges

The biggest challenge in sales forecasting is recording the correct data. Although it considers many factors, a sales forecast, at the end of the day, is a lot of number-crunching. If those numbers are incorrect, the end result will also be incorrect– and that can really cost businesses. That isn’t an issue alone, but the average business also generates a lot of data. 

Depending on how advanced their analytics are, they could record the number of sales, how much time a customer spends in the store, or overarching factors like market share and seasonality. 

That’s a lot of data to record, especially if there are multiple locations. Recording by hand takes a long time and increases the rate of error. It’s why businesses are turning to software instead.

How inFlow can help forecast sales

The techniques outlined in this article are pretty straightforward. The challenge lies in continually adapting your forecasts to shifting market conditions and accurately tracking all the necessary data. This is where software solutions come in handy. Inventory management software like inFlow can track how your products move and generate a variety of reports based on the data it collects

inFlow is a powerful, easy-to-use tool that will handle the historical data collection for you, allowing you to focus on other vital aspects of your business. It’s also accessible on any wireless device, ensuring you can monitor your sales and inventory from anywhere in real-time.

The post Inventory Management Through Accurate Sales Forecasting appeared first on inFlow Inventory.

• The ability to estimate construction costs accurately is crucial for ensuring fair compensation and maintaining business profitability.
• Construction cost estimates include direct costs, such as labor and materials, and indirect costs, such as permits and overhead. 
• There are five main types of construction cost estimates—feasibility, intermediate, preliminary, substantive, and definitive—each used at different project stages to refine cost accuracy.
• Businesses can create accurate estimates using software tools that give them quick access to historical data.

Contracts are a funny thing. No matter how hard parties try to create equal terms, it always proves challenging. And in the world of construction, it’s often the workers left with the short end if things don’t go right. That’s why being able to estimate construction costs accurately is so important. Estimates that are too high could cause you to lose business. However, estimates that are too low might cause you to lose money. 

Your ability to estimate construction costs might not be the most important thing, but it’s certainly one of them. An accurate construction cost estimate ultimately dictates whether you receive fair payment. So how do you accurately estimate– and what does construction estimating even entail? Let’s find out!

What is construction estimating?

Also called a building costs estimate, construction estimating is exactly what it sounds like: estimating how much a construction project will cost. Who would have thought? 

Jokes aside, though, a lot goes into it, and calculating the right figure is a complex process. You’ll need to account for various things such as labor, shipping, materials, hiring subcontractors, and securing all permits. 

What goes into a construction cost estimate?

We touched on it above, but generally speaking, there are two main types of costs to consider when making a construction cost estimate: direct and indirect. Direct costs are any expenses directly related to a specific project, such as materials and labor. Indirect costs refer to resources spanning multiple projects, such as permits, licenses, marketing, and any other overhead.

Generally speaking, most of the costs that go into any construction cost estimate are the direct costs of material and labor. Accurately estimating these will take a combination of experience and historical data. After all, construction projects are large, expensive, and require workers from various fields, all of which you’ll need to pay a different rate for their work.

The sheer scale presents issues for material acquisition, as well. When buying in literal tons, the cost adds up quickly. Materials are also subject to more frequent price fluctuations. And when working at such a scale, the price difference of a single dollar can equate to tens of thousands. 

Why is it important to estimate construction costs accurately?

Providing reliable construction cost estimates can make or break any small business. At first glance, it might seem like an accurate building cost estimate only benefits the client, but that’s not true. Clients often require contractors to add specific clauses to protect themselves from runaway expenses. Which means an accurate estimate is in the best interest of both parties.

Beyond the monetary advantages, accurate estimates will also give your business a reputation for transparency and reliability. This will result in a lot more happy customers who will be more than willing to promote your services. According to a survey by the Joint Center for Housing Studies at Harvard University, about 40-60% of participants said they hired contractors based on referrals.  

How do contractors estimate construction costs?

At the end of the day, construction estimating is a complex task that involves many different numbers and calculations. The math itself might be simple, but the number of factors to consider makes it anything but. 

Regardless, it’s important to know what the client wants before making any estimates. If they already have design documents on hand, it’s up to the contractor to create an estimate based on their know-how. 

In some cases, though, clients might not have those design documents– so where do contractors go from there? As it turns out, there are a few different ways to estimate construction costs. Let’s examine them to answer this question. 

Types of construction estimates

There are many different methods for creating a construction cost estimate. These methods are also subject to tweaks depending on circumstance, but they usually fit one of five estimate types as laid out by the American Society of Professional Estimators (ASPE). Here’s an explanation of what they are and when contractors use them. 

Feasibility

Parties develop a feasibility estimate before the project’s true conception. Experts create these based on the cost of similar projects, but they can vary wildly in terms of accuracy. They generally range from -25% to +75% in cost. Feasibility estimates are more concepts than anything and could be based on a list of criteria. Prospective clients use these to determine whether a project is feasible and/or reasonable.

Intermediate 

Potential clients use intermediate construction cost estimates to determine whether a project is feasible. While a feasibility estimate serves a similar purpose, intermediate estimates are more in-depth. Like feasibility estimates, large-scale project overseers use them when deciding whether to engage or abandon a project.

Preliminary 

A preliminary building cost estimate is more detailed than both its predecessors. Its purpose is to be accurate enough for funding measures. As such, it’s crucial that preliminary estimates are as accurate as possible. 

Substantive

This type of estimation uses unit costs to generate a reasonable final cost. A lot goes into this one: schematics, deliverables, and project objectives. It’s used during the project to manage the budget. 

Definitive

You should only create a definitive estimate when all costs are known. Contractors use this type of estimate to place bids on existing projects. While it is the most accurate type of estimate, it may still be susceptible to change due to economic factors.

When do contractors create an estimate? 

You might have noticed an escalation of sorts with those estimate types above. That’s no coincidence—instead of setting a price and sticking to it, contractors constantly reevaluate their costs. Depending on the project scale, one price hike could put them in the red. It’s important to keep one eye on cost at all times. 

This could be especially relevant depending on the scope or type of project at hand. Building an industrial-grade laboratory will require more expensive and uncommon materials than, say, an apartment building. Materials for such a task may also require special expertise, and be subject to more extreme price fluctuations. 

Most contractors will submit a series of building cost estimates at varying stages of the process, each with increasing nuance. So, you may start with a feasibility or intermediate estimate and work up to a definitive one at the client’s request.

How to accurately estimate construction costs

Estimating construction costs confidently takes time and experience. However, some tools and best practices can help guide you.

• Understand the project scope—this might be the most important part of crafting a building cost estimate. Without a complete understanding of the project scope, it would be impossible to provide an accurate estimate. Ask as many questions as possible and study all the available documentation carefully. 
• Use historical data and software tools—one of the easiest ways to predict the future is to look to the past. With field service software like inFlow, you can quickly check your historical data through our reporting feature. You can see the components used on similar jobs and what you paid for them.  
• Account for contingencies—unforeseen events are bound to happen, so you should always account for these unexpected expenses. Typical contingencies range from 5-10% of the total project. 
• Plan for economic factors—with inflation on the rise it’s safe to assume what you pay for materials today will be wildly different from what you’ll pay next year. Be sure to factor this in when you estimate construction costs. 

Wrapping up

As the construction industry continues to grow, accurately estimating construction costs is crucial for the success and profitability of any project. It ensures fair compensation and builds a reputation for reliability and transparency. By understanding and applying the various types of construction cost estimates, contractors can provide accurate and reliable projections that benefit both clients and themselves.

The post A Quick Guide to Construction Cost Estimation for Contractors appeared first on inFlow Inventory.

• Bidding on government contracts offers long-term, stable, and highly lucrative opportunities for construction companies. 
• Businesses that win government contracts will enhance their reputation and pave the way for future opportunities. 
• Bidding on government construction projects can be highly competitive, requiring detailed and compelling RFQs.
• Small businesses can utilize software tools to craft accurate, comprehensive RFQs to compete more efficiently for government contracts.

The construction industry is the backbone of modern society and one of the most valuable markets in the world. People need homes, companies need office buildings, retailers need storefronts—the list goes on. Construction projects vary wildly, but one subsector stands out as particularly lucrative: government contracts. This is why every contractor should know about bidding on government contracts. After all, a successful bid could result in significant growth for your company.   

Landing a government contract might not fund a business for its lifespan, but it certainly pays well, and more importantly, it can open other doors. In this article, we’ll go over what a government contract entails, what bidding on government contracts looks like, and how to bid on government contracts. 

What is a government construction contract? 

Even if you don’t give it much thought, you probably understand that the government does a lot of things and, therefore, employs a lot of people. In fact, at the end of 2022, the US federal government employed 2.87 million workers, which was 1.9% of the US workers at the time. While the government isn’t a typical business, it still requires many things that a typical business does, such as office buildings, computers, networks, servers, and so on.

Generally speaking, the government doesn’t retain employees capable of setting all these things up. Instead, they outsource it via contracts. From here, different companies can start bidding on government contracts. 

Something worth noting here is that there are many different types of government contracts. As we mentioned earlier, the government is responsible for many things. For example, the military needs equipment to function, but the government doesn’t manufacture it. Instead, it outsources that work to private companies through government contracts. 

The military is the most obvious example, but there are government contracts for a number of different services, from transportation and waste disposal to more complex tasks—like designing and building rockets for NASA.

Government contracts for construction are no different. They need something built, so they allow various companies to bid on government contracts in order to find the best fit. 

Why should contractors bid on government contracts?

There are many reasons to bid on government contracts. First and foremost, they tend to be lucrative. The government has deep pockets and generally worries more about receiving the best product or service available than price. Government contracts also tend to be long-term. Instead of taking place over one or two years, government contracts generally span over five or ten. 

This offers a lot of stability in an industry infamous for quickly changing conditions. For example, in 2022, NASA awarded SpaceX a $843 million contract for the Artemis 4 mission, which isn’t until 2028. 

Contractors who win a bid on government contracts will benefit more than just financially. A government contract is a notch on the belt for any field service company. It tells other potential clients that the government chose your company for the job out of all the other applicants. That counts for a lot. 

In short, winning a government contract has many less tangible benefits aside from money.

Where do contractors find government construction contracts? 

So, now the big question is how to bid on government contracts as a small business. There are a few different ways. Occasionally, a government may reach out to a specific business or company, but this is uncommon, especially for smaller businesses.

Most of the time, federal governments will have a website or portal to list contract opportunities. The USA, for example, has sam.gov, which lists federal contracts for registered businesses (note: registration is free). Canada, on the other hand, has Canada Buys. Regardless of where a construction business operates, there are opportunities available. So check to see how your local government advertises their contracts. These websites are where all construction companies go when they are looking to bid on government contracts, whether your company has two people or two hundred.

However, more prominent companies will often have an edge when bidding on government contracts with an enormous scope of work. This is why organizations like the US Small Business Administration (SBA) exist. They help small businesses by offering contracts that match their skill sets. That said, they have a formula for deciding whether a business is “small.” So, ensure your business meets those criteria before applying or bidding on government contracts.

How does the bidding process work?

Once you’re ready to bid on government contracts, you must register with the relevant government website or portal. This process is pretty straightforward and shouldn’t take too long. From there, you’ll move on to the next phase, the request for proposal ( RFQ). The government in question will outline the project requirements and invite contractors to submit proposals. At this phase, you get a chance to sell yourself, stating estimated costs, timelines, qualifications, and so on.

The request for proposal phase is an audition, and this is where the competition starts. A ton of different companies will be bidding on government contracts and sending in their proposals. Standing out among the crowd requires being able to give better numbers, whether that’s a quicker schedule or lower costs. Organizing information in a cohesive way and including visuals can also provide an edge over the competition. 

At the end of the day, though, making solid proposals requires intimate market knowledge and experience. These are what craft your proposal and ultimately decide who wins the contract. Do your research beforehand and take the time to craft an RFQ that will stand out from your competition.  

How to successfully bid on government contracts as a small business

Most businesses start small, but that’s no reason to forgo bidding on government contracts. To be clear, though, you won’t be competing with just other small businesses. You’ll also be competing with huge conglomerates that have storied tales behind them.

To stand out, it’s all about effectively selling yourself. To do this, you must create a comprehensive and competitive RFQ. Here are three major things to consider:

• Understand the scope—Ensure you understand what you’re getting yourself into when bidding on government contracts. Be honest about timelines and material costs because overpromising never ends well, especially when dealing with the government.
• Cost Analysis—presenting an accurate cost analysis is one of the most essential aspects of any RFQ. If you use field service software, such as inFlow, this shouldn’t be too hard. Our software provides users with various reporting features that make job cost analysis fast and easy. 
• Compliance—The construction industry takes compliance very seriously, and so should you. Your RFQ should show without a shadow of a doubt that your company will meet all regulations and compliances.  

A great RFQ is also more than just numbers on a page. You should also emphasize your company’s strengths and past achievements. You could even think about going the extra mile and including visuals to help illustrate your vision for the government contract. 

Final thoughts

Making a successful bid on government contracts is no easy task, but the payoff is enormous. If you spend the time to find and bid on these contracts, you could set up your construction company for years to come.

Bidding on government contracts doesn’t have to be daunting, either. It’s all about having the right tools to make the process easier and less time-consuming. With the right software solutions, you’ll win those contracts in no time.

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