If the management and control of inventory forms part of the core of your business, then the monitoring and optimization of your inventory practices will no doubt carry a high priority.
STock management is an often-underutilized area for businesses of all sizes. Surprisingly, even large and profitable companies sometimes miss opportunities for streamlining and improving their inventory practices.
While there are wide ranges of contributing factors that influence businesses differently and to differing degrees, there are some basic considerations and guidelines applicable to most stock-centric businesses. With a moderate amount of targeted application, most businesses can apply these basic tenets to their stock management and control.
Measuring the health of your inventory can be a difficult task, even for experienced inventory managers, though there is some collective wisdom that you can meaningfully apply, if you follow some basic lines of thought.
Let’s take a closer look at some of the basic guidelines and see how you can measure the health of your stock practices and management.
Inventory management software – First off the block
While some traditional and non-automated management systems can be done manually, there is little benefit – even for small businesses – to not adopt stock management software.
With huge advances being made in Software-as-a-Service (SaaS) solutions, the old barriers of upfront expense and ongoing IT labor costs are largely being overcome. What this means for small and start-up businesses is access to industry-leading software at an affordable subscription. Shared infrastructure and costs translates to a more open market where businesses of any size can find solutions appropriate for their stock management requirements.
Inventory optimization – The Holy Grail
One of the best ways any business can be sure of inventory health is through the use of inventory optimization techniques. Like every tool, these are dependent on some good management and utilization.
Ideally, there will be someone in your business who can take ownership of using, understanding and monitoring the techniques involved. In most cases some tweaking will be required to get it just right. This is especially true for businesses with a large and complex supply chain or breadth of inventory.
Optimization can include everything from setting individual safety stock requirements to adopting lean inventory practices. As a general guide, any technique or approach that can reduce waste – like unnecessary costs – and maximize production, service and profitability can be considered optimization.
Inventory control – Getting the balance just right
Stock is often one of a business’s biggest ongoing expenses. The act of purchasing and storage alone can carry a significant investment of capital. The last thing any business wants is to end up with excess or obsolete stock. That being said, the other extreme spells lost sales and incomplete orders.
Getting the balance just right is a crucial step towards inventory health.
In a perfect world, a business would only ever have just enough stock to fulfil their orders and sales. The practice of using ‘lean’ inventory techniques requires a certain amount of foresight and automation. Indeed, the best lean practices are so attuned to the stock processes of a business that parts or products will be ordered at just the right time to arrive for sale or manufacture.
Real-time visibility – Seeing inside your inventory processes
The ability to see every part of your stock process in real time is another key step towards achieving and maintaining stock health.
Staying in control of the stock-balancing act requires some skill and a whole lot of intelligent automation. The best stock management systems – including SaaS platforms – offer a variety of ways to utilize real-time visibility.
How you use the software or what features you will require will of course depend on what your business does, though it pays to look for software that offers as much visibility as possible. This is especially important for manufacturers that need as much control as possible over every node and process within their supply chain.
Doing regular spot-checks
A great approach to maintaining inventory health is to perform regular spot-checks. The scope of what’s looked at – like optimization success, safety stock levels, spoilage etc. – is up to the business, managers and inventory specialists. Over time the trouble areas will become obvious and you’ll be in a good position to adjust or correct them.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. When not writing about inventory management, you can find her eating her way through Auckland.