Unfortunately, with inventory management and indeed as with anything, there is no reaching your destination and sitting back, confident that you ‘have arrived’ with no more hard work required. To stay on the forefront of your game, you need to be in a mind of continuous improvement, where you are actively searching for opportunities to do better. It is this attitude that keeps companies humble and sets them apart from their competitors. Regarding inventory management, we will look at some keys methods you can employ to ensure operations are improving.
Criticise current inventory management practices
As uncomfortable as it may be to analyse and isolate the company’s inventory flaws, this is a necessary means for ascertaining how well the inventory is managed. Here are some points to look at:
Analyse your stock and break it down into three different categories: safety, working stock and expired or obsolete stock. In doing this, you will be able to ensure that none of the three categories are overrepresented implying inventory is not being controlled. It will also give you some helpful data to work with when calculating the amount of new inventory needed to replenish sales.
Methods of calculation
It is important to take a critical eye over your stock calculation methods. It is far easier to achieve lean production where there is no purposeless stock lying around, if the calculations for inventory requirements are done accurately from the beginning. Particularly, if you find yourself in a position where there is excess stock continuously, running a serious risk of becoming obsolete or expired, then it may be time to go back to the beginning and correct the initial calculations.
Penalties and reward
No one enjoys being criticized or pulled up but lean production and tight control of inventory can be an excellent yardstick when it comes to analyzing company performance. Incentivizing the intricate control of inventory and making it a goal of the company and everyone will ensure you reap the rewards.
Get intimate with your product
You cannot expect to control something well if you do not understand its intricacies. It is important therefore to know your product and what factors affect it such as storage conditions, shelf life, transport conditions etc. One point a lot of businesses slip up on is trying to do things quickly and paint every product with the same brush. They are not the same and they likely have vastly different intricacies and so the most effective way of ensuring everything is in balance is by treating each product as unique.
Make your suppliers feel special
What we mean by this, is cultivate good relationships with your suppliers where you seek to have a mutual respect and understanding of each other’s business. In doing this, you are ideally creating a level of trust between your companies where one does not, at any cost, want to let the other down. When you have good relationships with your suppliers, they are going to be far more likely to prioritize your business over someone else’s and ensure your orders are fulfilled on time and in full. This level of provision subsequently allows you to do the same for your customers and so the trust circle continues!
It can be difficult for smaller companies with limited budgets and one or two production staff members to see the value in digitizing everything, but adopting technology will pay off. There are custom-designed inventory management software systems such as Unleashed which make it ten times easier to achieve total control of your inventory at any given time point. They allow for transparency, as all data is recorded to the same platform and is accessible from anywhere. In conjunction with this, they allow for real-time analytics meaning data is up-to-date and as accurate as possible. Using a software system also makes it far easier to accurately calculate inventory requirements when the data you are working with is up-to-date and accurate. The time involved to set a digital system up may seem overwhelming and unaffordable but in doing so, your company will reap the rewards.