Optimum inventory management relies on accurate data so that inventory orders can be balanced with sales. By data, we mean the numbers and categories of stored and sold product, expiration dates and storage locations so that there is always just enough product ordered in to satisfy consumer demand and sales.
Improving accuracy around inventory data and management is of paramount importance to keep a company’s books and customers happy. In this article, we review some ways in which inventory management and accuracy can be improved, especially if you have a lot of stock and are feeling overwhelmed.
One of the first steps to accurate numbers is to ensure that those numbers reflect what is physically in stock. To correlate the two and ensure they agree, you need to conduct an initial stocktake to get an idea of all existing stock in the warehouse. You then need to resolve any inventory discrepancies that arise.
This sets the foundation for cycle counting, which is where a smaller amount is counted more frequently. You essentially cycle through the entire warehouse by simply counting lesser amounts more often as part of a program. This makes the task far easier to tackle and is just as effective at keeping things in check. Very large stocktakes can be exceedingly disruptive to business activities and can actually cost the company in terms of downtime, and so cycle counting can be a very beneficial inventory management strategy. To complement cycle counting, a perpetual inventory management system works best.
Reflect on your entire supply chain
Part of inventory management is everything that happens before and after the process of stocking and processing inventory in production. This refers to your supply chain and comprises everything from your suppliers to your freight forwarders and eventually, your customers.
Supply chains are vulnerable to risks and challenges. If one party falters, it can impact your company’s inventory and its ability to fulfil customer demand. Therefore, scrutinising your whole supply chain to mitigate risk as part of your inventory management role will facilitate a far more accurate warehouse.
Use RFID tags
RFID tags are attached to inventory units so that if any item is receipted in or moved about the warehouse, the data pertaining to this can be recorded by warehouse software and summarised for the manager. This not only facilitates moving and using products in an efficient manner, but it also allows erroneous, misplaced products to be located without having to rifle through every box in the warehouse.
If RFIDs seem too advanced, consider using barcode scanning technology first.
Consolidate with a sensible software system
If you are a multichannel retailer, it is imperative for inventory management accuracy to keep track of all your stock and transactions across all your channels. However, this is far easier said than done. In reality, it can cause major issues if not approached sensibly. Inventory management software can give you a bird’s-eye view of stock across all your channels in one platform so that you can view and make informed decisions for each of your outlets simultaneously. This also means you can optimise your inventory in terms of pushing sales in high-turnover stores that could deal with accumulating inventory from slower stores.
Think about a product’s name and home
A large part of inventory management lies in the warehouse. Pay special attention to the name convention used to label products and the location where the products are stored. The reason why this affects inventory accuracy is that if products are labelled illogically, they may be mistaken for other product, resulting in inaccurate ordering for their supposed replacement, or even inaccurate order fulfilment.
If products are not properly organised in the warehouse, they can get lost among all the stock. Then they may not be used within their expiration date, leading to obsolescence. If products aren’t stored properly, warehouse staff might spend more time looking for and retrieving stock for order fulfilment. It all comes down to two things: to reduce the amount of time spent on maintaining and retrieving products and to reduce the likelihood of mistakes deriving from confusing labels and locations.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.