The most-common answers are, 'So I'll know where they are,', 'To save time and money' and To make employees accountable.'

• When you know where your stuff is, you won't rent and buy tools you own but can't find (or can't find quickly).
• If your system supports quick look-ups, you'll save the time you'd otherwise spend leafing thru sheets of paper or calling around.
• Employees are more careful when they know you're tracking. Petty theft goes down.

Some people have more-specific reasons to track tools. Maybe you're responsible for preventive maintenance or for billing projects for tools and equipment. A good tool control system can help with both (and a lot more).

It depends on where you're starting from, but the savings can be substantial. Waterwheel's customers tell us ...

• "It saves us a lot of money, just thru the time it saves."
• "I know it saves us lot of money on our tool costs."
• "It has paid for itself over and over."

'It' in these quotes is Waterwheel's tool tracking software but could just as easily refer to tool tracking in general.

While Waterwheel's software tracks equipment and supplies, the heart of our system is tool tracking.

• Unless your company is large, it's not hard to keep track of expensive equipment: there isn't that much of it (which is why many companies can and do track equipment paper or white boards).
• Supply usage can be tracked (imperfectly) with purchase orders.
• When construction companies figured out that better control over the items in the middle - inexpensive equipment and tools - could increase their profit, they started using paper systems and spreadsheets and began adopting the products a few companies - including Waterwheel - developed for tool tracking.
• Over time, those systems expanded to include equipment and supplies. Equipment, because many companies found it easier to deal with all their stuff in one system. Supplies, because systems like Waterwheel's provided extra detail and better control over, for example, items purchased for stock (then sent to jobs) and items returned from jobs.

It depends on how organized you are, the tool-tracking procedures you already have in place, how many items you want to track and the tool-tracking approach you decide to use. If, for example, you're starting from scratch and only want to track your expensive items in a log book, you should be able to set your system (i.e., your log book) up quickly and easily. Your tool-tracking procedures are often a bigger challenge.

It can be hard to change existing tool management procedures, especially if your employees currently just take what they need. But your tool tracking system will fail if your data isn't collected and recorded reliably and consistently. If you're not currently tracking tools, think about how that data is going to be collected and recorded (when, where and by whom). If you're already tracking tools, take a look at your current procedures. If there are holes through which data can slip, un-recorded, you need to change those procedures or accept that some data isn't going to be recorded (items transferred between job sites, for example, are often not recorded).

Depends on how you operate. As general rule, contractors running 3 or more jobs at the same time can benefit from tool control. But we've run into large general contractors who subcontract everything out and own no tools at all. So the size of your tool inventory is another important issue. Electrical, mechanical and general contractors often own a substantial number of mid-priced tools and can reap particular benefits from tool tracking.

Ask yourself, "What do I need to do to make sure my tool tracking system is updated reliably and consistently?" For many companies, the best answer is: appoint a tool manager. That person doesn't need to be full-time. Many companies give him other responsibilities, e.g., purchasing, delivery.

Are there alternatives? Absolutely. Especially if you have long-time, trusted employees. An honor system CAN work. Employees can fill out chits as they take or return items and those chits can be entered by an office worker. Or you can send out physical inventory sheets and update your system based on the results. Just be aware ...

• It's difficult to change a culture. If your employees are used to taking what they need without writing anything down, you'll have to work hard to get them to reliably and consistently fill in a tool chit.
• Don't assume a barcode reader in your tool room will solve the problem. See the answer to the next question ('Is barcoding worth the effort?'). And remember that the real issue is reliability and consistency. If your employees won't fill out a chit, how much more likely are they to use a barcode reader?
• If you're working with less-trusted employees, your tool control system will probably fail if no one's responsible for it.

Barcoding is faster and more accurate than typing. It's especially valuable if your operation is high-volume (if, for example, your employees line up to check out tools in the morning and check them back in at night) or you have a large facility and want your warehousemen to collect data away from the computer without writing it down, e.g., while loading a truck.

While barcoding is reasonably-easy, it isn't as simple as some imagine. Most users need to be shown know how to use a scanner. If the scanner is running a program (most portable scanners do), users need to be trained to use that program.

The adhesives available for labels have gotten better and better, and many labels will last for a long time if they're somewhat-protected (labels stuck inside a gang box lid should last for a very long time). That said, regularly inspect your labels and replace those that are damaged. If you do, your system will work smoothly. If you don't, your barcode system will become less and less usable and will probably fail.

Some items have mottled finishes, to which labels don't adhere well. Or are covered with grease. You could buy metal barcode labels and screw or rivet them onto such items. Or you could etch each item with its item number (a good idea, in any case) and simply accept that those items need to be keyed in (to your barcode scanner, if it has a keypad), not scanned.

In a logbook, on clipboards or tool chits. Each approach has benefits and limitations.

You decide what information is recorded but, minimally, will want the item's description and new location. You'll probably want the date and, if you want to track specific items (for example, THIS specific compressor, not just any compressor), a serial or item number.

Log books and clipboards can be used in 2 different ways. The first is to write everything down sequentially in 1 log book or on 1 clipboard. When someone takes or returns an item, he or she writes that item on the next line in the log book or on the clipboard.

• Benefits. Cheap. Easy to implement, easy to understand, easy and quick to use. Maintains a history. Can include all your tools, equipment and supplies or just those items you want to track. If you have the recipient sign for the items taken, provides an audit trail.


• Limitations. Look-ups are difficult and time-consuming: you have to scan through the book or clipboard. If items aren't recorded by serial number or ID, it's difficult if not impossible to track a specific item's history, e.g., if a tool is damaged, it can be hard to determine where it was last. Reporting is time-consuming and generally not attempted.

The 2d way to use log books and clipboards is to create separate log books or clipboards for each item you want to track. Every time someone takes or returns an item, he or she finds that item's log book or clipboard and writes the item's new location etc. on the next line of that item's log book or clipboard.

• Benefits. Cheap. You don't need to write down the item's description, serial or item number. Easy to look up the current location and history of the items being tracked. Easy to implement, easy to understand, easy and reasonably quick to use (though it may take a minute to find the right clipboard if you have a lot of 'em). If you have the recipient sign for the items taken, provides an audit trail.


• Limitations. It's hard to track very many items this way. History reports for a given piece of equipment are easy, but other types of reports (what's at a particular job? what's been at a particular job?) are time-consuming and generally not attempted.

Chits. Every time someone takes something, it's written down on a separate, small piece of paper.

• Benefits. Cheap. Easy to implement, easy to understand, easy and quick to use. Maintains a history. Can include all your tools, equipment and supplies or just those items you want to track. If you have the recipient sign for the items taken, provides an audit trail.


• Limitations. Look-ups are difficult and time-consuming: you have to leaf thru the chits. If items aren't recorded by serial number or ID, it's difficult if not impossible to track a specific item's history, e.g., if a tool is damaged, it can be hard to determine where it was last. Reporting is time-consuming and generally not attempted.

One approach (of many) is to list the items you're tracking on the left side of a white board then hand-write each item's current location and transfer date to its right. When an item's moved, erase the old information and hand-write the new.

In the more-elaborate system pictured below, cards (with barcodes) have been printed for each job and item being tracked and attached to a white board with magnetized card holders. Every day, the item that are being moved are placed under the job they're being assigned to. The user then records that day's assignments with a barcode reader.

• Benefits. Inexpensive (you need a board; if you want to move labels around on the board (rather than erase and hand-write), you'll need magnetic card holders). Easy to look up the current location of the items being tracked. Easy to implement, easy to understand, easy and quick to use.


• Limitations. It's hard to track very many items this way (realistically, you'll probably track just expensive equipment). No history. No audit trail. Reporting is inconvenient and generally not attempted.

Spreadsheets. When an item is moved, most users write the transfer down on a chit or in a log then update their spreadsheets later, often at the end of the day. Barcoding is a possibility but generally requires a mix of mouse, keyboard and barcode input, i.e., it isn't real 'smooth.'

• Benefits. May be cheap if you have an extra computer with spreadsheet software and your spreadsheet is simple. Easy to look up the current location of the items being tracked. Simple spreadsheets are easy to implement and easy to understand. Current-location reports are easy if your data has been entered consistently (but difficult otherwise), for example, everything at a particular job. If you have a clever programmer, you can do a lot with macros and your system can become quite elaborate, with features like billing, preventive maintenance schedules, repair cost tracking, barcoding, integration with other applications.


• Limitations. May be moderately expensive if you have to buy a computer or spreadsheet software. May be very expensive if you're paying a programmer. You have to load your data. Generally cumbersome to use (you have to search for the item you want then type in the new location and date), i.e., data entry isn't fast and convenient. Data is often entered inconsistently; inconsistent data is hard to search for and doesn't sort correctly (see POWERFUL SEARCH in How do spreadsheets and specialized tool-tracking packages differ?). Spreadsheets rarely include tool histories or audit trails. If programmed to include more complex capabilities, spreadsheets can become difficult and time-consuming to implement and difficult to use. If you've used the services of a programmer, you're up a creek if you have a problem and that programmer isn't available.

Home-grown databases. When an item is moved, most users write the transfer down on a chit or in a log then update their database later, often at the end of the day. Some systems are designed for on-the-spot data entry, as items are transferred. Barcoding is a possibility.

• Benefits. May be cheap if you have an extra computer with database software and your system is simple. Easy to look up the current location of the items being tracked. Simple databases are easy to implement and easy to understand. Current-location reports are easy (everything at a given job, where all your rotohammers are). If you have a clever programmer, your system may retain histories and can become quite elaborate, with features like billing, preventive maintenance schedules, repair cost tracking, barcoding, integration with other applications.


• Limitations. May be moderately expensive if you have to buy a computer or spreadsheet software. May be very expensive if you're paying a programmer. You have to load your data. May be easy or cumbersome to use, depending on your programmer's skill and the way the program is set up. May include audit trails. If programmed to include more complex capabilities, may be difficult and time-consuming to implement and difficult to use. If you've used the services of a programmer, you're up a creek if you have a problem and that programmer isn't available.

• Look-ups are easier ("Where's our big generator?"). If you're only tracking is a few pieces of heavy equipment, it's not hard to find the item you want on a whiteboard or clipboard. But The more items you track, the more difficult this becomes.
• Reporting is easier, too. It’s takes a while to pull a list of everything at job ABC out of a paper system.

This adds up to: you can track more items, more effectively. The more stuff you track, the more you benefit.

A simple spreadsheet should contain ID, DESCRIPTION, SERIAL NUMBER (insurance companies want these), LOCATION NOW, TRANSFER DATE and NOTES columns. Use the NOTES field as a catch-all, NOT the DESCRIPTION field. The more consistent your descriptions, the better.

While you could use either, we recommend creating your own tool numbers ('how to' suggestions are in the OVERVIEW section of Tracker 8 help - Items; suggestions for descriptions are in Tracker 8 help - Descriptions).

• Serial numbers are long. They take time to type. It's easy to make a mistake. Your IDs can and should be short so you can type them quickly and make fewer mistakes.
• If you want to track individual items, you need something more than a description. If, for example, you want to know WHICH truck or compressor Joe took to job ABC, you need a serial number or (better) item number.

We aren't accounting experts, but our impression (after talking with many people) is that accounting systems don't handle tools well. We think this is because accounting systems are designed to track equipment and supply costs, not the location of your $250 to $5,000 tools. In other words, while it may be possible to track tools in an accounting system, it's not convenient or easy.

The best proof of this is the relationships Waterwheel has enjoyed with accounting software companies and dealers. If they saw us as competitive, they wouldn't work with us.

Integration saves time and reduces errors. Instead of typing the same data in 2 different places (e.g., new jobs and employees), you only type in in once then export it to the 2d system.

In the past, software often lacked the ability to import or export data (or made it so difficult, it wasn't worth the trouble). Software written more-recently almost always supports some kind of integration.

If your accounting and tool tracking systems are designed to talk with each other, integration is worth looking into even if you're not transferring much data. If you're transferring a lot of data, integration is worth considering even if a custom solution is required.

When an item is moved, some users of specialized tool tracking software write the transfer down on a chit or in a log then update their software later, often at the end of the day. Some systems are designed for on-the-spot data entry, as items are transferred. Many systems offer barcoding or other automated data collection technologies.

• Benefits. You'll pay less for specialized software than you'd pay a programmer for the same capabilities. Technical support and training are generally available. Generally easy to look up the current location of the items being tracked. May be easy to look up histories. Well-written programs make data entry fast and convenient and address some of the data entry limitations seen in simple spreadsheets and databases, e.g., it may be easy to transfer everything at one location to another (a process that can be time-consuming in a spreadsheet or home-grown database). Generally offer a library of reports. May offer audit trails and options like billing, preventive maintenance schedules, repair cost tracking, barcoding, integration with other applications. Can often import data from and/or integrate with existing applications.


• Limitations. Generally more expensive than simple spreadsheet and database systems. You have to load your data. Depending on the software, may be cumbersome or easy to use, rigid ('you have to do it our way') or flexible. If you're using more complex capabilities, may be time-consuming to implement. You're up a creek if you have a problem and the company you bought the software from goes out of business.

If you're comparing specialized systems with spreadsheets, check out How do spreadsheets and specialized tool-tracking packages differ?.