You buy timber by the cubic metre or lineal metre but your customers might buy it by the pack or the piece.
Keeping the two in sync, in real time, is where margin quietly slips away. Plenty of systems can handle more than one unit of measure, just not at the same time on the same product.
So the conversions end up in spreadsheets, rules of thumb or someone's head. And because it never shows up as its own line on the P&L, it is easy to miss.
Here are 5 signs
it may be happening in your business. Each ends with a yes-or-no question.
Count your yes'es and check your score at the end.
1. Your conversions live in a spreadsheet or in someone's head
Every timber size has its own maths. A cubic metre of 90×45 is a different number of lineal metres than a cubic metre of 140×45.
In many businesses, those conversions sit in a spreadsheet that one or two people built and understand. It works, until those people are on leave, busy or move on.
That is key-person risk. When the knowledge sits with individuals rather than in your system, quoting slows down or gets riskier the moment they are not there.
Quick check (Yes/No):
If that person were away for a
month, would quoting be affected?
2. Part-used stock still shows as full
A pack of 90×45 is sitting in the yard. Last week, it was opened and some lengths were pulled for a job. The pick came through in cubic metres so the warehouse team had to work out how many pieces that meant and their maths was slightly off.
On paper, everything looks fine. But the system recorded a different quantity from what actually left the yard, so what you can sell no longer matches what the system says you have.
Over time, those small gaps add up. Stock figures drift from what is in the yard and quotes or reorders end up based on numbers that aren't quite right.
Quick check (Yes/No):
Would you struggle to say
exactly how much is left in your part-used packs right now?
3. Your margin per job is an estimate, not a number
You know whether the business made money last quarter. But if someone asked which jobs made money, the answer would involve some educated guessing.
That is usually because cost and revenue are recorded in different measures. Timber is costed in cubic metres and sold in lineal metres and the link between them is worked out by hand, if at all.
Without a real margin per job, it is hard to know which work to chase, which customers to reprice or where to push back on a quote.
Quick check (Yes/No): Would working out the margin on last week’s three biggest jobs take spreadsheet digging or guesswork?
4. Your stocktake is a write-off exercise
You count pieces in the yard. Your system holds lineal metres or cubic metres or both. Somehow, the numbers never quite agree.
When pieces, lengths and volume are tracked separately, reconciling them takes hours. The gap that is left usually gets adjusted away and written off.
That write-off is real money. Just as importantly, it hides where the leak is happening, so the same gap turns up again next time and your financial reports starts looking strange with accounts showing figures that you know are not quite right.
Quick check (Yes/No): Was your last stocktake adjustment bigger than you expected?
5. Quotes take too long to put together
Clients ask for quotes all the timeand builders often want products in job lots. That means a single quote can easily run to 30 lines or more. If each line needs a manual conversion, that adds up fast.
In fact, that time costs you twice. You are paying wages for it and every hour spent working out a quote is an hour not spent with the next customer.
Manual calculations also leave room for errors, which can flow straight into your margin.
Quick check: Does a quote with 20 or more lines take your team more than an hour to put together?
How did you score?
Yes |
What it suggests |
|
0-1 |
Your setup is doing its job. Keep it. |
|
2-3 |
There is likely margin leaking in specific areas. Those are worth a closer look. |
|
4-5 |
Conversions are probably costing you more than you realise. |
Where to from here
If a few of these sounded familiar, it is rarely a people problem. More often, it is a general-purpose system being asked to handle measures it wasn't built for.
The fix isn't always a new system either. Sometimes it is setting up what you already have differently.
If you would like to talk through your results, we are happy to compare notes. Reach out to our friendly team today.