Chemical Inventory Costs
CarWash College™ Tip of the Month
This month I am talking about maintaining a product, not equipment. With chemical costs always on the rise, this tip can potentially save you thousands of dollars over the course of a year.
When it comes to chemicals, maintaining the inventory at the car wash is an important factor. To begin, you need to identify each chemical that is used in your wash. Then enter this information into a list. The list should identify four (4) things; product type, amount of product on hand, par levels and amount to order (see example #1 at the end of this tip). Par level is the amount you should try to keep on hand at all times. When developing this list, take into account a product that might be used to clean equipment and walls, and keep extra inventory for this purpose. If there is not enough of the product used for cleaning available, employees tend to use the product they have the most of, often a more expensive one. Once you have a list of the products, and the levels that are required, the usage needs to be tracked. An easy way to track usage is to mark the date the drum went on-line, and every night at closing mark ending levels with a permanent marker.
The first step in determining the chemical cost per car is to take inventory. This needs to be done on a monthly basis. Generally speaking, 12 inches of depth equal 21 gallons of liquid in a 55 gallon drum. At the end of the month, measure the amount of liquid remaining in the opened drums. (55 Gallon Drum= Inches of liquid remaining times 224 divided by 128 = Gallons Remaining and for a 30 Gallon Drum= Inches of liquid remaining times 155 divided by 128 = Gallons Remaining). Count the full drums to determine the amount of each product that is currently on hand. Then you need to look at all the purchases that were made for the month. Calculate the previous inventory counts, plus any purchases, minus the current inventory. This can be represented as B = Previous inventory, P = Purchases, C = Current inventory. (B+P-C=Chemical Costs). This number will be the amount that was spent on chemicals for the month. Next, the amount spent on chemicals is divided by the number of cars washed for the month. This formula will give you a true cost per car. It is helpful to have an Excel spreadsheet that this information can be plugged into with self-calculating formulas (to receive a complimentary copy of the spreadsheet email your request to email@example.com and one will be sent to you).
CHEMICAL ORDERING FORM
Taking the time to setup and implement an inventory system can potentially save you thousands of dollars per year. By marking the drums at the close of business each night you can immediately catch a problem. Let’s say that there is a bad check valve on the tire shine, and 20 ounces is lost per night. Over a months’ time that’s 600 ounces that would be lost at a cost of .12 per ounce. Monthly, for just one chemical, that’s $72.00 of pure waste.
Robert Andre is the President of CarWash College™. Robert can be reached at RAndre@carwashcollege.com. For more information about CarWash College™ certification programs, visit www.CarWashCollege.com or call the registrar's office at 1-866-492-7422.