The inventory management of today’s business world incorporates a wide spectrum of skills and functions, utilized by an even wider range of users. From the simple, manual stock-count of a local shop to the tech-savvy, real-time stock tracking of a busy modern retailer, right through to the complex and multi-layered supply chain management of an international manufacturing business.
A lot goes in to the mix, even for a relatively average-sized business. On any given day, inventory management must wrestle with a multitude of tasks and operational processes.
Of course, a small business operating from one PC with excel spreadsheets and periodic stock-counts looks very different to the large-scale manufacturer with thousands invested in top-of-the-line management suites, mobile barcode technology and hundreds of interfaces, accessing real-time analytics and data.
And while it may seem on the surface that they bear no resemblance, they are both using inventory management techniques and practices – just on very different scales. Funnily enough, both may be making some of the same inventory mistakes.
With this in mind, we’ve put together some of most common inventory management mistakes – made by all types of businesses – and look at some simple ways they can be resolved.
Stock-outs and shortages
Arguably one of the most common recurring issues in inventory management, inventory stock-outs are a serious and often misdiagnosed problem for businesses of all varieties. While they cause the most damage when allowed to affect the more urgently needed parts and popular products of your inventory, even with the more rarely used items the negative effects can be significant, sometimes affecting the efficiency of the whole inventory system.
There are a number of ways to address this, but the best overall solution is the use of an automated inventory control system. The various tools and techniques that help combat stock-outs, like reorder points and safety stock, work best when a perpetual inventory system is in place.
With the ability to automatically set safety stock requirements and reorder points for each individual item or part, the danger of stock-outs can be greatly reduced.
Inexperience and lack of expertise
This is a common problem for businesses, and one of the main reasons why new software implementations fail. Having employees with the necessary specialized skills and experience is as important as investing in the cutting-edge software and systems they’ll be using. Indeed, if you have the software but not the talent, the efficiency of your inventory management may still be undermined.
While it is of course possible to train employees to do specialized roles, that should come later once your business, or new system, is up and running smoothly. This is especially true during a software implementation or change management process. Consider hiring specialists to get started; there are consultants-for-hire with experience in every facet of inventory management.
Many software providers will offer training to their clients, which can be a great leg up when adopting new software. The extra cost is well worth it, especially if your business success hinges on meeting critical and time-sensitive inventory targets. The investment at the start will pay off in the future.
Poorly managed warehouses
Especially true for large, complex inventories and manufacturing businesses, poor warehouse management is a common source of inventory problems. Everything from the software and accounting method used, to the tracking and storing of stock, and physical layout of your warehouse is a factor – a few inefficient pieces of the puzzle can have a significant effect on the overall success and efficiency of your warehouse operations.
Warehouse Management Systems (WMS) control everything that comes in and out of the warehouse – the receipt, movement and stocking of goods, as well as the layout of your warehouse. They are a great all-in-one solution for most warehouse issues. Many now utilize barcode and mobile technologies to more accurately track all items and parts that your business uses.
Failed software implementations
For a software implementation to be successful, there’s a lot of careful planning required. This is true even if your business is looking to adopt a simple, user-friendly suite. It’s common for businesses to underestimate the effect of an implementation, only to find themselves in an operational mess that could’ve been avoided with the right planning and organization.
If your software provider is offering training for your staff, then take it. Everyone who’ll be using it needs to know how it works. Even the most ready-to-go Software-as-a-Service solutions such as Unleashed require some training before use. Remember that you need to accommodate to the lowest common denominator – the question should be asked: does the least tech-savvy or competent staff member know how to use it?
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.