By Lisa Maxwell on October 23, 2018
Inventory is one of the biggest assets of your organization. If you have too much surplus, you are tying up your working dollars, not to mention warehouse space you are paying for. If you have too little inventory, it impacts your sales and reputation as a supplier. As a distributor or manufacturer, you want to manage inventory to the best of your ability and reduce any inventory problems.
Let’s discuss these 3 tactics now. Inventory management quotes have been included to make it that much more fun!
How do I avoid/reduce stock-outs?
There are a few ways stock-outs can be prevented. First is to know your inventory whether it is raw materials or finished goods. Know who your vendors are and what average supplier lead time may be and for those not so reliable vendors build out the time to suit your requirements to make it realistic when ordering. These lead times can be added to your ERP system if you are using one.
Another area to focus on is forecasting. Forecasting will help you utilize past and present data to determine what you require to have on-hand to meet customer demand. You can create forecast reports to obtain this information. These reports are sometimes included with your business management software (ERP). By pulling this information you can detect your best-selling items, determine your customer’s requirement by item, seasonal item requirements, and have better control of your inventory turnover ratio.
“Determine what your customers need, and work backwards.” -Jeff Bezos
How do I improve my warehouse operations?
This is a hard question to answer without us walking through your warehouse and understanding your business processes. To improve your warehouse operations, we need to understand how it is currently running and what your daily tasks are, then we can provide you with a customized strategy for your company. We can, however, provide some generalized tips.
Firstly, are you using warehouse automation? By streamlining your warehouse, you are eliminating errors, providing your team with accurate inventory levels, improving customer service and increasing productivity. Some operations have implemented wireless technology in their warehouse. This wireless technology provides your team with up to the minute information and can update your business management software (ERP) automatically.
Barcode scanning is another method to improve your warehouse operations. Just think how quick it is to take a scanner and scan a barcode label and get the correct inventory opposed to having someone look at the products in similar packaging but is different and get counted as the same item. It is quicker, more accurate, and improves overall efficiency.
Multi-Bin Management is yet another method to improve your warehouse operations. Knowing where your inventory is is key to getting it out of your warehouse. If you can’t find it, how can you sell it? You can manage workflows more effectively by determining exact bin locations by warehouse, the amount of stock you have in each bin location, and the amount you have for distribution. This provides full control of your inventory.
We didn’t even go into the other unlimited options you have for improving your warehouse operations such as integrated shipping, barcode label printing, EDI and integrated e-Commerce, just to name a few.
“We want to turn our inventory faster than our people.” -James Sinegal
How do I know if my inventory value is accurate?
You should be doing a physical inventory at least twice a year or once per year if you do cycle counts. This will provide you with a clear picture of what you actually have on-hand. You can also do cycle counts throughout the year to manage stock levels, anticipate demand and keep track of shrinkage and loss control. These counts should be cross-referenced with the inventory you have in your business management system (ERP). These numbers should be similar to ensure you have a correct and accurate inventory value.
If these numbers are significantly different, there are some options you need to check out. If this is the first time you have done this, you first need to establish a benchmark, then set up goals for accuracy and perform this inventory count often to confirm you’re progressing forward. Make sure you have an inventory management feature within your business management system (ERP) and if not, is there one available for it. This will make your work less complicated and more productive. Another option is to review your supply chain. Moreover, make sure your employees are trained properly on your inventory procedure, use of equipment and know the company’s expectations.
“Inventory accuracy is the cornerstone to success. It is a bedrock topic to improving service levels, reducing lead times, increasing margins, improving efficiencies, reducing inventory levels...and the list goes on.” – Lisa Anderson
Inventory is a major player in all manufacturing and distribution businesses. This is a resource, as you have read, that can affect many aspects of your business, good or bad. And I will leave you with this last quote which really sums it all up for us.
“Inventory is money sitting around in another form.” –Rhonda Adams