One of the biggest and most important challenges many businesses will face is how to successfully manage and control their inventory. It is usually one of their biggest ongoing costs, and often one of the biggest overall investments. When you boil it all down to the essentials, inventory management matters because inventory is more than just numbers and data – it’s the lifeblood of a business’s income and investment.
Inventory managers face a daily battle – striking the right balance between too much and too little stock. This task requires a lot of careful planning, expertise and most of all, constant vigilance. Maintaining control of the flow of goods, and responding to the shifting currents of demand, requires the use of some key tools and techniques.
Minimizing unnecessary costs, streamlining processes and optimizing productivity are some of the key aims. When a business can consistently manage these well, it has built a solid platform to work and grow from.
To help your business do an inventory management spot-check, or if you’re just wanting to get your head around some basics, we’ve compiled six essential techniques for better and more successful inventory management.
Find the right inventory management software for your business
With a wide range of inventory management software to choose from, getting the right fit is an essential step towards success and stability. Whatever you choose should be guided by the needs of your business.
A good starting point is to form an accurate assessment of what your business actually needs from its software. Having a detailed and realistic implementation plan can help you outline and define what needs to take place, how that looks and what to do if it goes wrong. For example, if you need inventory serial tracking, make sure the SaaS you are considering has this as part of its feature set.
It can be helpful to make use of product reviews from trustworthy inventory management and business sites, as these will give you some idea of what software offers the best technology for the best price. Many businesses will employ the services of an inventory management or implementation specialist – ideally someone with experience in successful software implementation and a wide knowledge of inventory management.
Utilize inventory optimization techniques
Optimization is much more than just a buzzword when it comes to inventory management. In fact, optimization can sometimes mean the difference between a good system and the best.
The ultimate goal for optimization techniques is having the right amount of inventory at the right times. Of course, this can be a difficult balancing act, especially for businesses with a large and varied amount of stock. Many manufacturing businesses invest a decent chunk of capital in software and personnel to get this right, as it can greatly affect their overall efficiency and, ultimately, their bottom line.
There are a wide array of optimization techniques and tools available. Again, it depends on the needs of your business. It’s a good idea to get an overall understanding of the basic theory and techniques involved, as this will help you decide what implementations are needed.
Many inventory management software solutions will include features and functions to help achieve this but don’t assume this is automatic. Some understanding beyond reliance on software is often needed, in order to successfully measure and assess what is being achieved and what can be done better.
Utilize real-time data
Information is a powerful tool, but only when it’s accurate and up to date. Many inventory management systems can provide real-time data and analytics, from layered inventory tracking right through to forecasting data, automatic ordering and individualized safety stock. For the most accurate data, consider using perpetual inventory control software, as it is the best way to ensure the information you need is always at your fingertips.
Develop accurate forecasting
Sales and product forecasting has become a key inventory management technique in recent years, as it provides a useful way to predict demand and guard against over or under-stocking. While it’s a dynamic tool when it works, it pays to remember that it’s not a perfect science. There are some big challenges to getting it right.
Like most multi-layered techniques, there are a number of parts that contribute to its overall success and usefulness. For any business to utilize it meaningfully, some careful planning and expertise are required.
Some common pieces of the forecasting puzzle include: the use of accurate sales history, access to real-time data and the ability to make inventory adjustments in real-time, the use of management software with complex supply-chain functionality, and realistic ‘flat’ sales forecasting.
Used well, forecasting provides fertile soil for operational and sales accuracy and success. Try Unleashed’s integration with Lokad!
Make use of cloud and mobile technologies
New technology tends to generate change and excitement, bursting on the scene and carrying businesses on a wave of innovation. While it’s certainly not a bad thing in itself, some businesses are prone to leap before they look, sometimes resulting in failed implementations. All new innovation should be assessed, tested and planned before full adoption.
That being said, and providing the groundwork is done, cloud and mobile technologies provide some fantastic solutions. Cloud-based inventory management solutions like Unleashed are available on subscription, which means businesses can save on software and set-up costs.
As updates and fixes are the responsibility of the provider, businesses can often save on ongoing IT costs, instead putting more capital in other parts of the business.
Mobile technology is bringing some great new solutions to inventory and warehouse management. From the use of barcode tracking to mobile access via tablet or phone, inventory management is more accurate than ever, and considerably more portable. Our mobile inventory app is coming very soon!
Utilize Supply Chain Management (SCM)
With the overall goal to reduce inventory through greater efficiency, Supply Chain Management offers some great inventory management solutions. Using a cross-functional approach, many businesses will utilize an integrated solution – like an Enterprise Resource Planning (ERP) system – for better control of their supply chain.
Again, budget and expertise are factors; if you have limited capital to spend, look for an inventory management solution that provides the basics. Some cloud solutions offer great features and functions for a monthly subscription – which means more bang for your buck and the opportunity to upgrade later.
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.