Owned and Operated - A Plumbing, Electrical, and HVAC Business Growth Podcast

#164 - "We Lose $1,000s Every Day": The Simple Fix to Streamline Your Accounts

• John Wilson • Season 1 • Episode 164

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In this episode, we get real about how to master your service truck inventory and purchasing. We’ll cover how to cut costs for your business, avoid common mistakes, and streamline your operations with a solid PO system, VMI (Vendor Managed Inventory), and stronger vendor relationships.

Oh, and don’t miss our tips on using mobile truck setups to streamline operations. Plus, get practical advice on negotiating with vendors and keeping your inventory in check to save you big bucks.

Shoutout to Quick Staffers LLC

Quick Staffers are the staffing agency bringing global talent to the HVAC and plumbing industries. They specialize in placing trained overseas CSRs, fully equipped with the best SOPs and scripts at a fraction of the cost.

Don’t miss out—Get $1000 off your first placement here

Special Thanks to Avoca

Looking to train your call center and improve technician performance? Avoca AI is here to help your team identify existing issues, improve call quality, and drive results from start to finish.
 
Click here to schedule your demo today.

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John Wilson, CEO of Wilson Companies
Jack Carr, CEO of Rapid HVAC

John Wilson: You should be able to run an HVAC service truck with like 1,000 on the truck.

The bigger you get, the more controls you have to put in. The biggest thing is cut off access. We find thousands of dollars a day in mistakes.

Jack Carr: Just answer the phone. is one of those phrases that's always easier said than done. I know it was hard for me and my business because the phone always rings while you're out in the field trying to get something done or it's 8 p. m. And you're trying to get your kids to bed. Well, I have the solution for you.

I'm extremely excited today to announce quick staffers, your go to solution for building a high performing cost effective customer service team. We are placing CSRs who have been pre trained. On proven home service, SOPs and scripts, the same ones that Wilson and I use in our business. For a limited time, we're offering $500 off your initial placement costs for the first 10 signups.

See link in the description below or head over to quick staffers.com for more information. 

John Wilson: Welcome back. Welcome back, welcome back. 

Jack Carr: What's going on? 

John Wilson: I feel good like we're going into 25. We're locked in on our targets. We've got clear budgets. We've got a bunch of. process to help drive us there.

Jack Carr: Sweet, man. I mean, this actually dovetails really nicely into what we wanted to talk about today is, as part of our initiatives going into 2025 we did the crunch the numbers at our budget this year. We looked at next year and it came out that We are spending close to 34 to 35 percent of revenue on material.

And so that's in some inefficiencies on jobs, you know, messing up and not utilizing correctly, bidding wrong, things like that, which we're working on. But we think a large portion of that is not having good data, right? We don't know what we don't know. And so how do we fix that? What we're working on right now is going to a full PO system.

And so I have some questions on like what was The implementation looking like for you. So we've just got 2, 400 square feet of warehouse. It is empty warehouse. We're putting in shelving, we're doing co assignment with Ferguson. They are working with us directly to provide boxes, and we're going to use the scanning tool and all this kind of stuff.

But there's a lot there that I'm trying to imagine and trying to build, but I don't know what I don't know. what was your first iteration of VMI before VMI? Like, what did that look like for you prior to you having an entire sales structure inside your actual business, a shop inside your shop that you don't own?

John Wilson: yeah, it's, it is cool. I need to, I need to do like another shop tour soon. We're doing a bunch of like interior decorations and walls and doing a bunch of cool stuff. So we've, we tried warehouse a bunch of different ways. We've tried actually warehousing it like barcode scanner, all that stuff. We did a consignment for parts.

So there's a bunch of vendors out there, Wolverine brass, local ones too, where they'll come in and be like, they'll come in weekly and count your parts. Basically, and then they'll just min max. so, okay. Hey, you're at 10 box here. Says you want 20. Here's 10 more. so we did that. We really, I mean, we bounced all over the place.

A lot of different processes. 

Jack Carr: I mean, that's what we're trying to avoid is we want to put a system in place that can drive us from here until VMI, right? Like that's the goal at the end is if we can. You know, sell Ferguson, 2, 500, you know, 2, 400 square foot of DMI that they can just provide for us. That would be amazing.

But for now, like the question is, how do you view the PO system in general and how did it start and then how did it tie into the best functioning warehouse that you think could get you from, if you were to go back in time, if you can get you from point A to VMI now? 

John Wilson: I mean, the big thing, the big reason we ended up choosing VMI is like the investment of staff.

And that's the hard part is it is really hard to find and be able to afford like incredible warehousing staff that understands your business and you're competing with all the wholesalers for, for that, for that talent. and it's not, it's not cheap. Now granted, you can have like. Sort of the quintessential retired plumber, retired HVAC guy, sort of be the parts guy.

And that's probably how I would do it if I was attacking this problem again, is I would go find somebody who was, didn't want to be in the truck anymore and ask him if he wanted a part time job managing parts. Because he understood him and he could understand how to. You know, save costs and stuff. So that would be my first, like, inclination.

Besides that, I mean, the big lesson with inventory is have as little as possible on hand. Yeah. and negotiate the hell out of it. 

Jack Carr: So maybe it'll be helpful that you could poke holes in what our plan is. 

John Wilson: Okay, let's do it. So, our plan is starting from a PO perspective, is we are planning on tying every single job to any single purchase.

Because that's where we're having issues right now is, hey, we're missing some things, they're not tying in directly, they're not tying in service type, and we can't control it. So, we created a system kind of based on yours, where we have heating, or HVAC install, HI, the job number. HS, the job number for service, and then P, for all plumbers.

And that's our plan initially, they, the tech uses ServiceTitan to enter in any kind of parts that they buy at the warehouses utilizing the ServiceTitan system properly, for special purchases, then our dispatcher is going to also be our, dispatcher. Who currently orders some parts, she will be ordering parts and then entering the PO system through service Titan correctly there as well.

And then in terms of truck stock, we are going to create a location that is going to be our warehouse. And we have a list of truck stock, min max. Essentially, like what the, the, cosignment does, and then the plumbers and HVAC guys will be responsible for filling their truck stock up directly from our warehouse and then we can reorder it, and then we have one or two people here at the office who will manage mostly who will be the ones who scan for that, because it'll be completely locked down.

And that's what our plan is. 

John Wilson: Sounds good to me.

Jack Carr: Try to keep as little as possible, really just truck stock and then a few different units now. So we'll store some units for weekend work. We have water heaters and stuff, but we don't actually have HVAC units.

So we're going to really try and push to get some HVAC units in here. That'll be huge. 

John Wilson: Good. Yeah. I think the, the big thing, like the bigger you get, the more controls you have to put in. And the first thing you already talked about it, but like centralizing purchasing and not allowing purchasing.

So, you know, when we first implemented RPO structure four years ago, same thing. But then the next step was we communicated with every vendor. If this comes without my class code, PO structure, I'm not paying your invoice. I don't care. Someone's probably stealing from me. someone's buying on our account.

And then we locked it down and we enabled only two or three buyers. Like me, our purchaser, one of our managers. 

Jack Carr: Was that an approval thing where they called you to approve that PO? No, no one could place an order. 

John Wilson: Here's our approved PO system. If you don't follow these two things, I'm not paying your invoice. So we just set that up as an autoresponder for bill. com. So you email us your invoice and you get an automatic response. Hey, here's my PO structure. If it doesn't say this, I'm not paying it. Here's our approved buyers.

If it's not them, I'm not paying it. Like somebody else bought it. I didn't approve of this purchase. And then usually once you kick back a couple invoices, they get it pretty quick. 

Jack Carr: Yeah. The crazy thing about this. And I challenge anybody out there who's our size, you know, sub 5 million, really dig in on your POs from.

Your vendors, because everybody makes mistakes. It's painful. we went ahead and did this exercise starting in like June and we found like $60,000 in stuff that either wasn't us. Kind of wild, honestly. 

John Wilson: We find thousands of dollars a day.

In mistakes today, like right now, every single day, thousands of dollars a day, and it can be so like now we're actually in the same process as you were just like down to the next couple steps, which is like, what's our receiving process? We didn't have one. This is an actual error that I'm about to say.

Yeah, we got billed for two parts at 500 a piece. I get the invoice. I'm like, what's going on here? This is weird. Because I was going through, I was personally approving them as I tried to understand the problem like a month ago. And I go back there and I find out that there was refrigeration caps, so like 3.

They billed us for refrigeration canisters, 500. Mm hmm. They gave us the caps. They didn't give us the canisters. So we got overbilled by 975 or something like that. Just random mistake, just on a Tuesday. And any day of the week, you can just find thousands of dollars of errors. And then you just have to kick it back.

Hey, this is wrong. Hey, this is wrong. Hey, this is wrong. Why is this price the way it is? that's the next thing is we're finding like thousand percent markups on screws. And we're just kicking it back. You know, hey, we'll return it or you can change the price. Let us know. But yeah, that's, that's the process we're in.

Jack Carr: Yeah. I think the big thing is like just starting it, right? Because just getting something in place to try and get the lowest hanging fruit, which is where we're going to now. 

John Wilson: Lowest hanging fruit is reducing the number of buyers. Like that is it. Because what, when we first did that, Our material expense dropped 2 percent because what would happen is guys would go, they would go to whatever shop they liked, unnegotiated pricing.

They would fill their truck with stuff that they used earlier that day. 

Jack Carr: That was going to be my next question.

John Wilson: so we, this was two or three years ago. We just turned off all buying. Like, text, you can't buy.

Period. Gotta call it through the purchaser. We will call it in. And that's the approved buyer thing. But, shutting off buying to non, field was very important. Because they always bought two of everything. So, hey, I want two of this. I want five of this, just in case I need an extra one. And then suddenly you've got 30 grand rolling around on a truck.

Jack Carr: We just cleaned out a truck and it had so much money of just unutilized O rings and wax rings and screws that have never been used and something for like commercial jobs, or for a new residential. Installation we needed two of these and we bought two boxes of these, you know, at 150 bucks each and it sounds silly, but that 30, 000 in the truck, I mean, it's a lot.

It adds up across every truck, especially as you scale. So shutting off purchasing extremely important. 

John Wilson: I would say that that's probably the biggest lever number one thing who is buying and that, that lever doesn't go away. Like it just gets more complicated as you, as you grow.

But like, even now we're, we're in the middle of your project. Like we're doing the same thing, which is kind of funny. We're just like a step or two, a different step, but like same problem. So we're now centralizing our, cause our material purchases is pretty tight. Like we can gain a percent or two, but we catch a lot of problems.

But where we're struggling is like OPEX, like random stuff just slides through. so now we're doing the same thing for managers, like you can't buy anything. Even Brandon and I cut off our own credit card access because we were part of the problem. We weren't going through like accounting to approve, to make sure it's in budget.

John Wilson: Our managers did a great job.

Jack Carr: Good job Wilson managers for listening. So how was the first iteration of locking in truck stock and then making sure that that was as little as possible, but still met the needs.

And then, our last conversation, how did you cut off the auxiliary items? So, Home Depot purchases. Was it the same process? Approved managers only, even though it's not a will call scenario? 

John Wilson: So that's like a credit card. Our philosophy is, every dollar has to be approved because two million dollars a month flows through our checking account.

It is just too much money and there are, tens of thousands of transactions a month, so what you have to do is create these rules where our credit cards will literally not work without being sent money. We use a credit card program called Divi, and what we do is we set these, we call them assignable purchasing, so everyone starts off with a zero dollar credit limit.

You have to send in, via Slack, you have to, Request funds for the amount of money that you'd like to use. What's the use case? What's the job number? Same thing because credit cards are a big leaky ship 

Jack Carr: Yeah, we shut all ours down early this year So only three people have them including myself because of that we noticed the same thing Is credit cards leak leak leak leak leak went to wax got rid of that For yeah, and so like that's been all better.

John Wilson: Like it's literally if it's a 25 part at Lowe's, you're requesting funds. 

Jack Carr: Okay. 

John Wilson: Manager's gonna approve it, 

Jack Carr: yeah. Cause I mean, that's going to be a purchasing manager is still purchasing that, right.

But they need to get it approved first for the job. 

John Wilson: Yeah. I think the number one rule of purchasing is like the less people, the better ideally one. 

Jack Carr: Yeah. 

John Wilson: Like that's it. How do you consolidate your buying down to like one person? And, I remember this, there's this book, it's how to double your profit in six months or less by Bob Pfeiffer.

Oh, I love it. It's a great book. But one of the chapters, which we're probably going to do this for quarter one. So like fair warning to anybody who's listening to this, force any time a dollar has to get spent, force it to go through you personally and they have to come in person and ask for it.

And he's like, you'd be amazed how many requests for money just go away. so yeah, you got to have people ask, make sure they can come up with the reason why substantiate that spend, and have an approver and then oversight over that approver. 

Jack Carr: Okay. That makes sense. I mean, all that really starts with, like you said, removing the ability for.

Yes. And then stage two is to take that and then even give it another approval process on the back end of that. Okay. So then moving into TR stock. Right. So if we're taking away the ability for the team to buy what they need, when they need whatever they want, what is the, what was the initial process you used to, I mean, because I'm sure truck stock for you generally changes day to day.

month to month, year to year. what, what is the truck, your initial idea on building your first truck stock list? How has that done? 

John Wilson: We're about eight months into using Avoca and Avoca has been an awesome partner for us in our call center. So what Avoca does for us is they do two different things. One, they have their coach product and coach has been helping us do what it says.

Coach our CSRs every single day. It listens to every call and uses AI technology to basically pick apart that call and tell us where we can improve. And for the last eight months, we've been consistently improving our scores, which has been awesome. The other product they have is just conventional booking.

And it's an AI tool that books over the phone customer calls in and it either handles overflow as in our phones are full or it does nights and weekends for us. And a customer will call in and actually deal with an AI Agent all the way through booking and the savings inside call center has allowed us to ramp up our marketing to continue to grow Even more.

John Wilson: And I I do not think that we have this nailed down by the way I think that we're probably further along than you are. I think that we're a year away from being perfect at it We we spent this whole 2024 like our first pack out for a job And a packout's like, it's a Milwaukee kit, it's a kit basically.

So hey, every time you want a furnace, you grab this kit and it has everything you could need for it. so our first one went into practice January of this year. So we've had a year to perfect the packout system. Next year, we're really pushing hard on truck stock. Right. The purpose of packouts is that you don't have truck stock.

Jack Carr: Exactly. That works only for install. That like works for install, but, even works for some You can do service packouts. 

Jack Carr: But how do you do an HVAC service packout? Walk me through that. 

John Wilson: It's done in plumbing and electric. It's not done in HVAC. 

Jack Carr: That's what I was going to say because the HVAC seems like it's a difficult child here. 

John Wilson: I don't think so. To me it's all the packout system. And you just change how you do it. So we actually started removing shelves from vans because I don't think that you need empty shelves and your shelves should be empty because you shouldn't have truck stock anymore.

So we started pulling shelves and then we started setting up truck stock pack out kits. 

So it's an A B bin system. Where, John has bin A and B, both dedicated to John's truck. And on Monday I have bin A, I trade it in, Tuesday I grab bin B, you refill bin A, and you keep it lean. And maybe it's a thousand bucks per box, so you've got two thousand dollars a day dedicated to that truck.

We want mobile truck stock because I think truck stock gets much harder to manage when it's literally on the shelf versus I can wheel it off and on every day. 

Jack Carr: Okay. So then how do you balance then? Cause I mean, I like the theory behind that, right? The theory behind that as you keep it lean, the team's doing what they're supposed to, you know, you're not, you're not losing anything to inventory, but where you have a potential for loss.

Is how do you balance the amount of truck stock you have and the need for the technician now to run back and forth to the shop because Okay, so the answer 

John Wilson: Or the, assignable purchasing budget. Like if they need something, you request funds on your credit card and you go to Home Depot. 

Jack Carr: Because that, that's where I was going is like, even, even to say, take that step further so that, I mean, I would assume in the pack cut there's a condensate pump and things like that.

Yep. But like where I'm getting at is more, and I'm saying this, and as I'm saying this, I'm realizing like the, I ran in a van a couple months ago, like November, that big freeze we had, I ran for.

And I'm saying this knowing that I know the answer, but, you know, I think what it comes back to where we keep getting caught up personally is. Like the need for rescue motors and the need for okay rescue blower this size rescue blower that size rescue Top fan motor this size rescue top fan motor that size and once you get through like all of those potential parts Like it becomes a really big list that being said the amount of times that I've needed an actual rescue blower So minimal compared to the times that I've actually used them So, you know, I think that the answer is we We plan, we're planning for the inefficiency when it's not a real issue.

John Wilson: Yeah, that's our belief. So, we think that you should be able to run an HVAC service truck, with like a thousand dollars on the truck. 

Jack Carr: I think that's probably, yeah. It's going to be a bunch of capacitors. It's going to be, some contactors, search protectors, but realistically We put a humidifier on each truck. We put some air scrubbers. 

John Wilson: But everything else is going to, you know, we're going to order it for that job. We don't, we're going to start putting some universal stuff on there, but like, our feeling is HVAC is custom order. So Why am I burdening my balance sheet with random stuff?

And as someone, you know, I've been in this business for a long time. I've owned it for almost 10, nine years And the amount of antiquated hvac stuff that i've thrown away off the shelves is sickening 

Jack Carr: I'm, also looking at into my shop at some antiquated HVAC stuff that we bought years ago.

John Wilson: It's just sits, doesn't do anything. I mean, I've just given it away. Tens of thousands of dollars. So yeah, we really just don't like stock. 

Jack Carr: I think it's a good thing for everybody to hear. Cause it's one of those hard ones that, we like to collect and we like to build up stock to be able to have everything for efficiency purposes because HVAC, whether we like it or not is a, Most of the time, emergency business.

It needs to be done. It needs to be done now. So then how are you dealing with weekend load then? Right? Because that's going to end up, you just started doing weekends. The VMI, my guess is your VMI is closed on weekends. So how are you handling then that truck stock for off hours? 

John Wilson: Well, we'll stage it.

So if we know there's a weekend install, we stage the packout kit. So that's just back to packout kits. And then if somebody needs a part over the weekend, they'll either go to Home Depot and request funds, or they'll pull it, and we have cameras, and they'll just, you know, tell us what they pulled. 

Jack Carr: But that's not as common as you'd think.

So, yeah, and that's the other thing, is it ends up where, once again, I'm still planning for something that's low probability. 

John Wilson: I mean the truck stock handles most of it. Home Depot handles the rest. I'll make you feel better. Chris Hoffman. 180 million doesn't feel like he has a handle on truck stock.

So like It is a complicated problem. And my solution to the problem is telling the problem to go fuck itself and have mobile truck stock. So I don't have the problem.

But that's the same approach. I don't know if that's scalable, but that's what we're planning on doing. And it's the same approach that we took to warehouse. Hey, warehouse is really complicated. I could spend a ton of time trying to solve the problem face value, or I could avoid the problem completely by having VMI and have a different set of issues.

Yeah. And we've tended to choose like what's the highest and best use of my energy and learning how to run a great warehouse. Isn't it? 

Jack Carr: Yeah. 

John Wilson: I did see somebody doing truck stock incredibly, and it was, Apollo down in Cincinnati, 40 million, maybe 38 million shop, big shop.

And it was a huge expenditure of resource, like absolutely huge to maintain incredible truck stock. And at the end of the day, I roughly feel like they had slightly better control than I do with my structure. 

Jack Carr: Did they do it where like each truck is its own little mini warehouse and they all dedicated?

Yeah. So that was the way I've seen it as well. And we were thinking about going to complicated road. And I said, this is too much. I can't, we started, I started entering it in service time ago. The, the repercussions of having to utilize, I get better visibility on each truck, but not by that much. 

Cause I, I mean, I would get the same from, from being able to pull the same report of just the warehouse and who pulled it versus which truck, but that being said, I mean, honestly, and then the unspoken thing, which we haven't talked about yet is we've started running HVAC service, one truck out of a Maverick with a bed with, with a, not a bed cap, but like the, what do you, what do you call those?

The, it's not, I guess it is a bed cap. It's not the flat one. Yeah. So we started running Mavericks. You know, work. I mean, we, we put a cap on it and a pullout drawer. Okay, see, I told Brandon the other day, I was like, Hey, I'm pretty sure I can put HVAC service.

My goal is I never want to buy another van.

Jack Carr: I agree. Trucks only. Like, they're, 

John Wilson: They're 20 grand. 

Jack Carr: I told you I ran around in the van for those three weeks, and I didn't use anything out of the bag, John, for service. I used nothing. I, I pulled out, I have a box that I keep all my stuff in, all the individual pieces and parts and my tool bags and everything like that.

I didn't use anything. Anything, dude, he's gonna, the way we have it set up is we have all of the tools in the backseat. So they're locked up in the backseat. They're torches recovery machine. Vacuum pump, handbag. It all fits in that backseat when you lift it up. And then in the back there's a big rollout drawer that can grease all the small stuff.

and then on top of that is all the kind of lar, little bit slightly larger stuff. Yep. The down one downside is it won't fit a coil. That's the big thing is like if you have a big coil or something like that won't fit so the the the mavericks can't do Like the the coil replacements or anything like that evaporator coil.

Yes condenser coils No, that's where it stops and then the techs are forced to keep their bands clean because it is very small So, I loved it though. Like those trucks One great gas mileage, the hybrids, we, we bought five this year and we'll probably buy a few more next year as we start fate and then the vans have been gone to all the installers so they can, they can pull, you know, decent sized equipment with it.

John Wilson: Pickups for service guys is the ultimate hack. 

Jack Carr: Rangers, right? 

John Wilson: We're doing Rangers. We're doing Tacomas. But then I found out the price of Mavericks. Well, we couldn't get ahold of Mavericks. 15K less. A year and, yeah. Yeah, we couldn't get ahold of them when we were doing all this buying because they just weren't available, but they're available now.

So we're planning on bringing on 10 vehicles next year, maybe 15, and every single one of them was going to be a Maverick. And just like, cause dude, I can buy 10 vehicles for like 250 grand. Like, we're going to do it in cash. Like, if we can do Mavericks, I'm literally done buying vehicles with debt.

Which is freaking awesome. So cool 

Jack Carr: Is the Maverick platform, the same engine, same body, same everything. So it's going to be like the back to the cities, like the transit cities. So they're essentially doing that with it here in the next year or so.

But I love the Maverick platform. It has been a great truck for us. We have not had any issues with it. They're very reliable.

Great gas mileage. So we're excited. So we'll probably end up pre ordering a few of those cities and see if that's some kind of good in between. But honestly, the trucks have been solid themselves.

John Wilson: Vans are 60 grand. Vans are 60, 000 for the price of one.  You can literally buy three Mavericks for the price of one. So, we're buying 10 to 15 vehicles next year. Every single one of them is going to be a Maverick.

Or that, the other one is Chevy Trailblazers. 

Jack Carr: Trailblazers? 

John Wilson: I just bought three for 23 grand. 

Jack Carr: One second, I'm gonna Google that. 

John Wilson: Brand new 2025. 

Jack Carr: Who's that for? 

John Wilson: Salespeople. 

Jack Carr: Yeah, that makes sense. 

Why wouldn't you just, what's the cost on that? Why wouldn't you just put, get a Maverick?

So all of our salespeople and the service guys, we just don't put bed caps on the salespeople's Mavericks. 

John Wilson: These were 7 grand cheaper. I got Mavericks for like 22, 23,000. 

Jack Carr: So what was the trailblazers? 

John Wilson: Oh, sorry. I got the trailblazers for 22, 23. 

Jack Carr: That's Mavericks.

I think Mavericks are like 25 to 28. Yeah. Yeah, that's a hybrid, but if you get like the non hybrid, I think you can get them for all 25. 

Okay, so remove purchasing from all employees except a few dedicated implemented PO system that ties directly to Every single job so that you can track all money inflow outflow to jobs put in the PO system numerical, whatever the code that you want them to utilize, lock that in with your vendors, all of them, so that A, you can track between multiple departments, if you ever plan on going multiple departments, because that was one of the issues we ran into, but even in HVAC, dividing service from install, I think is important so that you can do individual job costing as a department.

Or gross margin job costing as a department. And then remove as little stock as possible to, and put it back onto the vendors as much as possible so that you're not a warehousing company. You are a service residential company. Yeah. Sound about right? And, and like, yeah. 

John Wilson: And VMI is becoming like much.

More mainstream. Like there's a vendor locally to us and they're putting VMI's like full blown staff VMI's in like four or five million dollar shops. And the idea for them is they own that, they own that contractor now. 

Jack Carr: Which is true. 

John Wilson: Yeah, not they just got that entire account like it's such a slam dunk.

So any growth that ever happens with that business, like all of it will go to them basically, which is what we've seen to like we've centralized into our VMI and I was talking, we did an end of the year sort of review. With our vendors, a couple of days ago, I used to have to manage like 40, 50 vendors.

There were like, you know, three or four big ones that got the lion's share, but like 40 or 50 total, I literally managed three right now. Like I managed three vendors and it is awesome. 

Jack Carr: From an HVAC perspective, like you still have to manage some spend to all the vendors, right? Because there's certain ones that run certain brands.

John Wilson: Couple hundred bucks a month. 

Jack Carr: Just want to make sure that we're clear. I was going to say, how do you do that? We have 

John Wilson: two vendors at a quarter of a million a month each. And then we have a third vendor at like 50 and those, that's basically like what we manage. And then we have like a few vendors here and there for like under a thousand dollars, but it really got very easy.

To manage and negotiate and handle that relationship. You know, it's very hard for a wholesaler to find a quarter of a million dollar a month account. 

Jack Carr: Oh yeah, that's, I mean, ten years ago that was somebody's yearly spend. Not even. Right, right. So now they're able to, to. Yeah, a lot of vendors will bend over backwards.

Am I missing anything? Any advice? Any big silver bullets when coming into this build of making sure my PO system's correct and that my inventory's correct? 

John Wilson: The biggest thing is cut off access. That will always be the biggest win. And don't pussyfoot with it. 

Jack Carr: Yeah, honestly, it's like, being given permission to do that feels so nice.

I know it's gonna be a headache, but at the same time, like For two weeks. Huge load off my heart because I know weeks 

John Wilson: technicians will complain, but then it's just like, guys, the reason I'm doing this, I just brought, I brought example invoices. The reason I'm doing this is this and this and this you bought four times too much on this invoice.

Do you know where that comes from? Me, like, so I, I think, I think it's easy to explain and also the total amount starts if we displayed the total amount, because when we first did it, we're like, Hey, just so we're on the same page, our overages for stuff that we did not need on jobs last month was 60, 000, 60, 000.

Then we brought up a couple examples of like egregious purchasing and the joke is called jackets and lollipops. People bought a heated jacket? on our account, like a Milwaukee 300 heated jacket. Yeah, yeah, yeah. And then they bought these like 5 lollipops. So the rule became 

jackets and lollipops. Some asshole bought a 300 heated jacket on my account. We took it out of his paycheck, but we sliced per like no one can access purchasing now. 

Jack Carr: That's a lot, but I don't see any other way through it, cause that, that's, like I said back to the beginning.

35 percent of materials way too high. If we would have reduced that by 5%, we would have had last year an extra couple, a few hundred thousand dollars in the bank account that we don't currently have. And thinking back to that, amazing. That would be just absolutely amazing to have today. So we're moving forward at starting the first, very excited.

I mean, we can update people at the end of next year, how it goes, but, yeah, man. 

John Wilson: If you like what you heard. Check out OwnedandOperated. com. Make sure to give us a five star review wherever it is that you listen to shows. And tune in next week. 

Jack Carr: April. April. No, April. We have a workshop in April. Oh yeah, yeah, we have a workshop.

John Wilson: Yeah. This will be our third workshop. 

Jack Carr: Yeah. If you want to see John shop, which is super cool and see this packouts and John really opens it up to everybody to take pictures of his packout lists. It's very, very open and very helpful for a lot of people to get to actually see this in process.

I mean, the only reason I'm doing well with how I imagined it is because I've seen John shop working. So April workshop, check it out on the website hopefully we'll see you there