One of the major contributors to the companies operation is inventory Management.
Inventory management happens to be a crucial part of the company’s operation. If you can reduce friction along your supply chain you can cut costs and increase efficiency. One of the benefits of strategic inventory management is that it keeps your customers are satisfied and employees happy, Also, it contributes to moving the whole business or organization move forward and better, improving your bottom line. Some of the biggest companies like Walmart faces in managing the inventory and this in return affects the functioning of the companies badly.
For smaller companies or businesses, inventory management can mean the difference between another year of business and shutting the store down.
Let’s consider some of the holistic approaches that help to tighten up the inventory management.
- Inventory tracking emphasizes on capacity.
It is never enough if we just look into how much of the inventory comes in and how much of the inventory goes out. And this is because inventory management is just not about the goods. It is about capacity. Tracking capacity means tracking assets, like equipment, storage, and human resources.
As far as the functioning of asset tracking is concerned, it does help us to answer several of our questions like, ‘ can you move our product? Do you have a place for it? How long do you have that inventory space?
Using this information can make better purchasing schedules and staffing decisions and improve the inventory flow.
2. Automating the data entry
Entering data about inventory by hand, whether it is an SKU code or just recoding location detail. is very time-consuming and error-prone. It is something that is not appreciated and is repetative for the employee morale
But bar code scanners can reduce data entry, time, and errors enormously, By using the barcode scanners you can save the company time and money and make your employee happier.
3. A centralized, real-time database is accessible to multiple users.
There was a time when people used pens and paper to track inventory. And more recently, many companies have mistakenly turned to Excel to track their stockroom.
But the ruly efficient inventory management in today’s fast-paced business environment demands a centralized database that is accessible to multiple users in multiple locations and updates in real-time. This is the only way to have an accurate picture of your supply chain and your inventory needs.
Using the inventory tracking system and the technology, it will allow you to follow products from suppliers to customers and understand the flow.
4. Preventing your stocks from rotting
Inventories happen to lose their value over time. So if something isn’t selling, it is taking up valuable resources that could be used for more popular items. It is then mandatory to move the products and check if the placement is an issue. Offering coupons and discounts to the lower price might be another way to get the customers interested in a proper performer. Any item that won’t move, don’t hold on to the hope, it’s better to let go.
There are definitely two options in solving this that is, you can either trash the item and mark it a loss or turn it into a donation.
5. See the big picture on cost and how it affects individual units
It is easy to look at the inventory at cost per unit, but that doesn’t capture the entire picture of the cost. There are multiple questions that need to answer, while we are accessing other factors like, What does it cost to move and store the unit? What about when you restock and there is a seasonal discount. Or you get a big order and receive a whole discount.
Analyzing these factors you get a more complete idea of what an item cost and how much you can sell for it. This will help to improve profit margins by taking advantage of lower costs and protecting yourself when your cost rises. This can also inform purchase scheduling.
6. Tracking and Staking: track your product sales and use this information to inform your inventory storage
The concept of inventory is about inventory movement and movement is about time and energy.
The lesser you need and use to get an item from, where is it is to where it needs to be, the better. Analyze your sales and store layouts and stockroom layout to see how items physically move through your store inventory. If your most sold items are stocked in the stockroom, there is an ample amount of time wasted to fetch it back from there and forth.
The storeroom layout is moved and where they are moved when you design your stockroom layout. It is important to keep in mind that storeroom layouts will often be dictated by the other departments and sales and marketing considerations so this is an area where inventory management needs to be a team payer.
7. The last point, is forecast effectively – high sellers? Seasonal rush? Marketing event and promotion?
A the heart of inventory management is forecasting.
From your supplier’s supply through your company’s capacity and to your customer’s demand it is all about understanding when the things will be available and when they will be sold. It is important to consider integrating inventory management with your whole business. Let’s look at some of the basic questions that arise here, is there a marketing event or promotion that might affect the demand? What might impact supply? What products sell the most and how quickly do they sell? – All these questions need to be answered and factored in if there is a need to create an efficient inventory management system.
Following products from the beginning to the end is challenging, but very rewarding. Companies that master inventory management quickly find they have additional resources for growth and expansion.
They also often have happier customers and employees.
Using the latest technology and approaches is crucial to achieving lean inventory management. Lean inventory management means your company can grow faster.