Senior executives and organizational CFOs understand the value of inventory management as any form of shortage or glut might lead to reduced productivity. Enterprises usually rely on external benchmarks for assessing the existing state of inventory and in the meanwhile, end up making erroneous operational assumptions. It needs to be understood that the inventory is probably the largest asset in a company and managing the same requires an extremely proactive approach. Be it right-sizing the same, identifying overstocks or liquidating certain products— improving the entire inventory management process requires an organization to deploy a host of innovative strategies.
Why Inventory Management is Important?
Inventory is the integral part of a supply chain and can be considered as an omnipresent metric. While having minimal inventory can lead to lower sales, excessive inventory cripples the organization by eating in to space, labor, money and even transportation costs. Moreover, enterprises with limited capital and resources should emphasize more on the inventory management process as tracking the same with accuracy can help them make better purchase decisions and improve stocking.
That said, inventory management isn’t a linear process and requires holistic attention. Organizations must concentrate equally on the quality, levels, records and even the physical aspects of the concerned inventory. Unless the enterprise is stocking the right form of inventory, it is pointless to go ahead with the discussions concerning the entire management process.
Tips for Improving the Inventory Management Process
It is essential to cover the ideas and perspectives that involve execution, planning and even investigations. An inventory management process aims at reviewing the critical aspects of supply chain while implementing cutting-edge technologies.
- Using Optimization Tools
Optimization tools for checking on the inventory management process have gathered massive levels of recognition. While these can be as simple as the stand-alone tools like ERP and WMS systems, they typically consider demand and supply variability followed by a host of replenishment parameters and other supply chain metrics. The idea is to incorporate these tools into the transactional hierarchy of the concerned distribution center; thereby minimizing human interventions.
- Employing Business Solutions with Real-Time Analytics On-Board
Tracking the inventory management process with excel spreadsheets is obsolete. Instead, organizations must make the shift towards real-time analytics that offer a unified informational model followed by granular analysis and instant responses. These innovative business solutions also support stimulations and scenario planning; helping businesses take myriad planning decisions.
- Treating SKUs Differently
One expert tip would be to assess the demand and supply variability patterns of different products in different ways. Better termed as service-level segregation, this approach can help organizations maximize their resources while segmenting their diverse stocking policies.
- Keeping a Track of Suppliers
More often than not, suppliers can let organizations down by not adhering to deadlines or commitments. Monitoring the listed suppliers and tracking them using inbound receipts are certain strategies that might fit in with an inventory management process. In addition to that, checking the quality of the received products is also important.
- Tracking Essential Attributes
When it comes to approaching an inventory management process with proactivity, it’s all about tracking product traceability and genealogy. While some industries are restricted to tracking the lot numbers, other essential attributes are often ignored; thereby impairing an existing management plan. However, the best idea to approach this situation would be to capture attributes and process the same in context to the supply chain. Tracking also increases overall visibility and improves the decision making.
- Leveraging Mobile Devices
Mobile ecosystems are ubiquitous when it comes to capturing data and processing the same. Therefore, businesses must look to leverage the same by training employees about their usage and functionality. This strategy improves accuracy, speeds up the business, increases efficiency and even minimizes the delays associated with paper-centric operations.
- Handling Obsolete Sections Smartly
Businesses must be extra careful about the slow movers in an inventory management framework. There will definitely be some items that occupy greater spaces, utilize additional resources and aren’t even sold on a daily basis. The risk of obsolescence is therefore paramount when it comes to dealing with the SLOB i.e. Slow Moving and Obsolete Items.
- Giving Importance to Slotting
It is important to slot items beforehand in order to segregate the spatial arrangements. Moreover, slotting also minimizes the travel distance, maximizes throughput and even improves productivity.
Inventory Management is the key to organizational productivity and amplified customer experience. However, it’s all about putting these strategies to use, in order to improve the overall inventory management process.