Controlling inventory is a difficult process that can be even more daunting without the use of serial numbers and inventory management software. Tracking inventory throughout the manufacturing process facilitates quality management as it is far easier to ascertain where problems are occurring in order to eliminate them. It is about being able to find your needle in the haystack. Let us take a look at what is a serial number, how to use them and what the benefits are.
What are Serial Numbers?
Serial numbers are unique identifiers assigned to each individual item. You may have a batch of components for a product which all have the same lot number because they are, for all intents and purposes, the exact same. However, if a variation were to occur in one of these components, it might detrimentally affect the final product. In this scenario, it would be helpful to be able to pinpoint the culprit in order to eliminate the issue.
Inventory management software can also facilitate barcode tracking where ‘reading’ the serial number of an item is as simple as scanning its barcode. Again, this helps to eliminate any communication or transcription errors when identifying products for ordering, manufacture or sale.
How Do Serial Numbers Help Inventory Management?
The benefits of serial number tracking are numerous. We have spoken of the improved quality control afforded by serial number assignment and tracking. This not only works from your own point of view, if a problem is identified downstream and you need to ascertain which component was the cause; but it also works the other way around if one of your suppliers identifies and issue with one of their components, perhaps something you have not used yet, and they issue a recall. You will be able to very quickly locate the faulty goods and exchange them for functioning components, avoiding the instance of jeopardising your own product.
Serial number tracking is also essential for optimum inventory control. It aids in the calculation of your Inventory Turnover Ratio which denotes the number of times you sell all of your inventory in a year. From this ratio, your business can accurately calculate how much inventory stock to order, without being overstocked or understocked.
If you are trying to convince your shareholders or managing director about the benefits of inventory management and serial number tracking, try this tactic. It will save you time and money. The amount of time spent searching through boxes for individual items is copious indeed. The likelihood of using a known faulty product is far greater without a fool-proof system such as serial number tracking. This will result in a tarnished reputation, lost money and time. And finally, the inability to control your inventory effectively resulting in excess stock sitting around and expiring is extremely costly to the company.
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.