Inventory is a vital part of any retail or manufacturing business, yet inventory management often doesn’t get the attention it deserves.
If you think about it, even in our homes there is some semblance of order to how we store our groceries. Instinctively undertaking basic inventory management, we generally place tea, coffee and sugar together for easy access and use, toiletries in the bathroom and cleaning products under the sink.
So, if it’s natural to do this at home, why not at least manage the inventory essentials in our business?
A place for everything
Organization is a fundamental requirement of good inventory management. A place for everything and everything in its place meaning everything requires clear and easy-to-understand storage locations with identification tags for each of these.
Think of how retail stores present products in clearly signed categories with complementary products together such as; Manchester, Appliances, Menswear and Gardening, making it easier for consumers to find what they are shopping for.
Storage locations should be similarly named, using straightforward inventory labels that are simple and easy to read, such as ‘Bay 1’ with ‘Rows 1, 2, 3 and 4’. Keep aisles and walkways free of obstructions and don’t forget to name empty and unused spaces for future use.
A common-sense approach to creating an efficient flow is to store frequently purchased, fast moving products in easily accessible areas. Having these close to dispatch allows for easy picking and improved shipping processes.
Employ unique identification numbers for inventory items. Avoid using product serial numbers as there is no guarantee these serial numbers are discrete, which can cause problems if another product has the same number.
Use logical names for each product. Item descriptions should be well-defined and clear with labels precisely stating what the product is. Having the ability to track lot and batch numbers is important for several reasons including quality control, service and warranty management and to help isolate production faults.
Always begin with an accurate starting count of your inventory stock. Undertake a physical count of inventory to ensure that paper or electronic records accurately reflect the actual on-hand inventory in your organization.
Be consistent with how you quantify inventory items. Units of measure can vary by weight or volume. Depending on the types of inventory held, these can be counted as individual pieces, multiples of 100, per gram, kilo or per box. It is important to pick a measure and stick with it.
Businesses need to know exactly what is in their supply chain. This includes knowledge of pipeline inventory, goods still in transit or in the process of being distributed. Have a system to track and trace inventory activity on demand, from receipt to sales and dispatch. Product recalls occur regularly and are particularly delicate in industries were the public’s health may be put at risk.
Inventory management software is an ideal tool for real-time traceability and can be used by multiple people across multiple locations.
Mastering the fundamentals of inventory management
Solid inventory management is key to the success of a business. Accurate inventory creates a system of checks and balances between your accounting and your warehouse teams, it helps pinpoint operational issues and identify ways to streamline processes.
Finally, ensure that you have adequate policies in place, a plan surrounding all inventory management procedures and trained well-informed staff.