Inventory can be a common concept in manufacturing environments.

Companies in these industries are used to looking at inventory turnover and what kind of returns they’re getting on their inventory investment.

Service companies can apply some of the same mentality too.

Service personnel are inventory as well. Consider doing some of the same analysis that manufacturing companies would do on their product inventory.

1. Service personnel turnover. By this, we don’t mean turn over of the workforce, i.e.: how many people are you losing in a given year? Instead we’re thinking about how many times you turn over your service personnel on particular assignments with customers.

2. Margins. What kind of margins do you have on your service personnel? Are you achieving high margins on them or is it fairly low margin that you’re justifying for having very high volume in?

3. What’s your dollar investment in the service personnel? How much do you have invested in each particular service person?

Follow some of the same calculation just like manufacturing companies might do and get new insights on how productive you’re being with your service personnel. You can tell which service personnel are giving you the biggest bang for the buck.

From doing this analysis, you should see some starts and you should see some underperformers. How long are the particular underperformers? Are you losing money on any of them? If you’re making money, is that even enough to justify the investment that you have in the people?

So, take a hard look at your service personnel, with the same careful eye that a manufacturing company would do when looking at product inventory. You just might find ways that you too can increase the return on your inventory, in this case, your service personnel.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value