Do You Know Where Your Tools Are?

Today's automated tool tracking software helps electrical contractors improve accountability and reduce losses due to carelessness and theft at the jobsite. When Bryan Jensen came onboard as warehouse manager at Cache Valley Electric in Salt Lake City a little under a year ago, he soon realized the monumental task he had ahead of him. With about 600 employees spread throughout several states, this

Today's automated tool tracking software helps electrical contractors improve accountability and reduce losses due to carelessness and theft at the jobsite.

When Bryan Jensen came onboard as warehouse manager at Cache Valley Electric in Salt Lake City a little under a year ago, he soon realized the monumental task he had ahead of him. With about 600 employees spread throughout several states, this expanding industrial and commercial contracting firm, which completed a large portion of the electrical work for the 2002 Olympics, had outgrown its tool tracking methods.

“If you wanted to check a tool out of the warehouse, you just wrote the number down on a piece of paper,” Jensen says. “Often, if we couldn't find what we needed, we just bought a new one. It was very difficult to track tools with this manual system. When someone would call and say ‘I need this,’ I wouldn't have a clue where to start.”

After taking an inventory and analyzing the firm's current tool tracking process, Jensen realized the amount of money the company was spending on replacement tools was excessive. He submitted a proposal to his supervisor to invest in an automated alternative. Enter an automated tool tracking software system, which turned out to be a positive move after one of Cache Valley Electric's big hospital jobs was ransacked.

“Luckily, we had most of our stuff locked up pretty tight,” Jensen says. “We only lost a couple thousand dollars from what I can tell. In the past, we wouldn't have had a clue as to what was down there, and the police report would have been very inaccurate. It was actually kind of neat to go through on my computer and just do a search of what I had in St. George [Utah] and give the police serial numbers of everything that was down there.”

Jensen soon learned how important the system was when he failed to use it properly. Later that month, thieves struck again, hitting another of Cache Valley Electric's jobs. This time, Jensen wasn't so lucky — he hadn't logged the serial numbers for those tools into the system yet. “The police said that without them, there was nothing they could do,” Jensen says. “I guess this is a hard way to learn the importance of properly tracking your tools.”

Asset management.

In the electrical construction industry, the profiles of automated tool tracking software customers vary from utilities and manufacturing plants to large contractors and Mom and Pop electric shops. So does the type of tools they track. Although many firms invest in the software to track high-dollar items like pullers or benders, some apply barcode labels to everything, which they can track with handheld laser scanners.

Recently assigned the responsibility of warehousing at Davis Electrical Constructors, Inc., Greenville, S.C., a subsidiary of Integrated Electrical Services that employs about 1,200 people and specializes in heavy industrial work, Harry Schoellkopf is a project manager in the firm's instrumentation and controls division. He puts tracking labels on everything from ⅜-in. drill motors all the way up to pickup trucks.

Depending on what features you're looking for, there are many tool tracking programs on the market, most of which include a core database module that offers browsing, billing, and reporting functions. Users can typically customize the software to meet specific needs by adding options like service, maintenance, and rental capabilities, but most programs run over a company's LAN or WAN and integrate with a variety of accounting systems. Some are even accessible over the Internet.

Fred Cummins, president of Waterwheel Software, a small, family-run company based in Los Altos, Calif., typically uses the analogy of a library to help explain the functionality of his system. “Most people are comfortable with the notion of checking out a book from the library and returning it,” Cummins says. “The library keeps track of the history of who had the book, where it's been, and if you owe a fine. For people who are familiar with software, I use the analogy of an accounting system because it's modular and you can pick different pieces of functionality depending on what your business is focused on.”

The old days.

What happened before automated tool tracking began to catch on? Some contractors had no official system; others used pen and paper. Computer-savvy firms used Excel spreadsheets, but they still required manual keyboarding for updates.

“Most adopted the ‘what other people don't know won't hurt them’ mindset,” Jensen says. “One guy's pickup truck might have thousands and thousands of dollars worth of tools in it that no one knew about.”

In the early days, Cummins says, automated tool tracking was mainly an educational sell. “Today, most people don't need to be convinced that tool tracking has value,” he says. “They need to be convinced they can implement it in their environment in a way that will have economic payback.”

In Cummins' mind, some contractors remain skeptical for two reasons: the “I'd rather be fishing argument” and more important priorities. “If you're a big electrical contractor, tool control will maybe save you $50,000, $100,000, or $200,000 a year, but it's maybe number three or four on the list of things that will save you money,” he says. “If your sales aren't happening, or if your estimators have not been doing a good job, your priorities rapidly go there because it's life and death. Saving a chunk of money on tools becomes important when you're running pretty smoothly and you ask yourself, How can I increase my profitability by 5%.”

Responsible for some 7,000 tools at Morrow Meadows Corp., an industrial/commercial contracting firm with 800 to 1,200 employees depending on season and headquartered in City of Industry, Calif., Dennis Grinstead was one of the early adopters of automated tool tracking, employing the technology five years ago. He characterizes the company's tool tracking efforts before that as a mess. “In the past, a tool would sit on the job until it was finished,” he explains. “If they didn't use the equipment, it just sat there. Now that I can see where all my tools are, I can transfer items from one place to another. For example, if I have 25 ⅜-in. drill motors on a job and there's only five people working, the math speaks for itself.”

Now, if all of the tools don't come back into the warehouse when a job closes, Grinstead simply starts writing purchase orders. “We just told our employees that from now on, all tools will be tracked,” he says. “If they don't come back, the job will be charged for them. The project manager or general foreman — whoever is in charge — is ultimately responsible for these tools, so it's in their best interest to stay on top of it.”

The automated difference.

Although he says it's difficult to quantify the benefits of his product with respect to productivity, Don Kafka, president of ToolWatch Corp., Englewood, Colo., offers some compelling statistics. Based on what clients are telling him, Kafka says using a tracking and management system cuts their tool and equipment costs in half. “They're saving about 40 cents an hour per person because most contractors are spending about 80 cents an hour for each person in the field,” he says.

According to Kafka, after implementing his product nine months ago in three plants, Boeing reduced its tool expenditures by 78%. “In Boeing's case, they had so many tools that they didn't know where they were at,” says Kafka. “Every time they needed a tool and couldn't find it, they'd buy another one.”

Before Nick Cox, purchasing agent at Current Builders of Florida, Inc., Pompano Beach, Fla., started using automated tool tracking less than a year ago, his firm had no real method to track its tools. “There were a lot of things getting stolen before,” Cox says. “Now the guys have to see that report every week and sign off on a dollar amount. They know that they're going to have to answer to it so they take accountability for it. Before, they wouldn't be as worried if things got left out, rained on, destroyed, or lost.”

Darryl Maggard, regional CMD sales manager at QuickPen International, Inc., Englewood, Colo., maintains more companies are converting their outdated tool tracking methods to automated alternatives because they're realizing that they're losing money. And it's not just in lost tools. It's in time. “Even if my tool control person's wage is small, if he spends 10 to 20 minutes a day or more just trying to locate items for reassignment, those are hours wasted,” he says. “When you calculate that along with lost tools, I could be losing 40% a year in replacement tools, stolen tools, misplaced tools, and employee time.” At $30 to $40 an hour, that gets costly.

Tool tracking tomorrow.

What does the future hold for tool tracking technology? Several of the industry's software vendors have their theories. Although Kafka's product is not a true application service provider (ASP), which hosts data off-site and makes information available through any Web browser, it is accessible over the Internet. He says companies are now starting to use the Internet as their WAN. “They're doing what's called VPN [virtual private network],” Kafka says. “So if you have an Internet connection and your company is set up for VPN, then you basically have the ability to get onto your network as if you were in the office, which is really different from what's called a thin client or truly Internet-enabled application.”

His company will move down the Internet-enabled path as demand for wireless technology continues to explode. His vision of the future includes a project manager accessing the Internet in the field via a PDA, browsing for tools and making transfers in the software right from the jobsite.

Anticipating the need for a pure Internet product, Maggard says his company has been looking into offering an ASP option on a subscription basis for the past two years. Although he says Quickpen could introduce such a product almost overnight, he doesn't see the need yet. “I don't mean to be cynical, but most contractors are kind of behind the times,” he says. “To make money with a product like that you have to have lots of users. I think that when the construction industry rolls around to that point you'll probably see us introduce a product like that.”

Cummins agrees and believes until the technology is wireless, people won't be comfortable with this type of arrangement. He predicts there will be a tidal wave of interest in ASP-type Internet products in the next two or three years as customers demand access for employees all over the country and the world.

Other hot technologies that could transform the tool tracking scene are global positioning systems (GPS) and radio frequency identification (RFID). However, Maggard says his company won't make a move in this direction until the technologies improve because at this point, the cost still outweighs the value.

Like Maggard, Cummins has also been watching RFID and GPS closely. But right now, one of the biggest problems with barcode systems is the label. The first concern contractors express relates to durability. When asked about performance, most vendors typically respond by saying the labels are very durable — if they're maintained and stored properly. The truth is when tools get knocked around, are thrown off 15-ft ladders, or are tossed into gang boxes, the labels can come off. RFID has similar problems. RFID is conceptually similar to bar coding, but there's a difference. Instead of scanning a label, you've got a device that reads a small transponder, which is a chip that can carry much more information than a barcode and is buried in a device that's put on the tool.

“When I checked into this most recently, it didn't seem like the technology was there yet and there were some problems — not the least of which is you have to figure out how you're going to attach these transponders to the tool,” Cummins says.

GPS systems are common in the transportation industry for tracking semis cross-country. “The idea is for a few thousand dollars you can install a GPS in every truck,” Cummins says. “Then you can sit in your home office and know exactly where everybody is. It's a little expensive for tools and equipment, but when the technology comes down in price, we can look forward to no data entry at all. So it's at least conceptually possible to have stuff going in and out of a door in a warehouse and the system is automatically tracking what's come and gone.”

Despite the promise of evolving technologies, Kafka says he's had very few requests for ASP, let alone GPS or RF technologies. “It's the Boeings and the GEs of the world that are more interested because they just don't want to administer the product,” he says. “They would just as soon have somebody else host it. But the electrical contractors — and we work with hundreds of them — aren't asking for it at this point.”

He thinks the push will be for changes in PDAs and wireless technologies. “Even though they're driving down the prices of these labels that they attach to garments in department stores, when you talk to an equipment manager they push back at spending 50 cents to attach a label that will track a $1,000 item,” says Kafka. “If you start saying ‘Now you're going to have to go into it, open it up, and attach this little chip onto it, which will cost you even as low as $5,’ they're not going to want it. I'd love to see it, and we're keeping our eye on GPS and all the other RF technologies very closely, but we just don't see it right now on the horizon. A lot of these contractors have to learn to crawl before they can walk.”

But once they learn to walk, watch out, says Cummins. “My observation about contractors is they tend to be conservative in accepting new technologies,” he says. “But once they're convinced that something has value, boom, they move.”

Sidebar: Tool Trackers

Want to research automated tool tracking products yourself? Look up the following list of vendors online for more information.

BarControl Systems & Services, Inc.

computer directions

Data Support, Inc.

Landmark Data Systems

QuickPen International, Inc.

Results Software

ToolWatch Corp.

Waterwheel Software

Sidebar: Taking the Trouble Out of Tool Tracking

Tracking and managing your tools and equipment by person, project, location, tool type, or due date is easier with an automated system. What is included in a typical software package? It varies among vendors. But most sell a standard core product with a variety of options for an additional fee. Here's a list of typical components and capabilities:

  • Tool-tracking software system: Typically features a user-friendly Windows interface with drag and drop technology so you can check-in, check-out, and transfer items quickly.

  • Database: Offers data management and reporting features.

  • Multi-site browsing: Enables users to access data from multiple locations, including projects or warehouses across the country or world.

  • Networking capabilities: Makes data available from remote locations over the Internet or your company LAN/WAN.

  • Service, repair, maintenance, and rental modules: Tracks repair histories and costs, produces preventive maintenance schedules, and reminds you when maintenance or rental tools are due.

  • Single or multiple location licenses: Allows you to install the software on a stand-alone computer or on a network for multiple users.

  • Billing functions that integrate with accounting: Automatically processes tool/equipment sale and rental rates as items are checked out.

  • Stationary reader or handheld laser scanner or wand: Scans tools as they enter or leave the warehouse or jobsite, enabling you to store thousands of entries until you can upload to your computer.

  • Bar code labels and tags: Typically offered as self-adhesive aluminum or polyester labels, they are also available in aluminum or metal plate versions with rivets or rubber tags for hard-to-attach tools.

  • Reporting capabilities: Helps you generate customized reports with charts and graphs.

  • Security levels: Allows you to screen out sensitive information or establish limited browsing capabilities for different users.

  • Upgrades: Usually available for an annual fee, an upgrade agreement provides you with unlimited upgrades for a certain period of time.

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