8 Tips for Streamlining Inventory Management
For businesses that are inventory-based, maintaining efficient processes for placing orders, tracking, and selling stock is important. Implementing a good system for inventory management is the best way to reduce operating costs and increase profit margin.
Streamline Inventory Management With These 8 Expert TipsHere are our top five suggestions for better inventory management:
1. Communication is KeyIt may not be surprising to hear that often, a lack of communication between various departments and teams within a company can cause inefficiency and lead to higher operating costs. Using an ERP (Enterprise Resource Management) system functioning on a unified platform, reporting is easier to do across the company and sales forecasts can have more of a direct influence when it comes to budgeting for operations and procurement.
When purchase orders are submitted to vendors by purchasing managers, the sales team will automatically be able to see expected inventory levels on their sales orders, making it much easier for them to manage client expectations immediately and in real-time.
2. Centralize Your InventoryWith this step, you will have one platform or system that contains all inventory data. This enables businesses to use one singular system to control logistics, finance, operations, inventory, and more, ultimately resulting in reduced errors and improved efficiency. With an automated inventory management software program, you can easily track your inventory and perform processes much faster.
It also provides real-time updates that can help you avoid common mistakes such as overselling or underselling stock. Since the main aim of inventory is to have what your customers want at the times that they want it, a centralized inventory can help you better achieve this.
3. Add AutomationAs with anything these days, automation will lead to more efficiency and saving time. When an automated system is in place for inventory management, the business can expect to save both time and money.
It is a wise idea to implement a well-automated system that is designed for managing inventory more efficiently. Choose your system widely as otherwise, this could result in issues that make the entire operation counter-productive, especially when it comes to saving time. When there is a good automation system in place for inventory, this can have many benefits including reducing human error, particularly when it comes to constantly updating stock levels on a lot of items.
4. Maintain Detailed RecordsWhen it comes to getting more insight into inventory and sales operations, this means tracking both lot numbers and SKU numbers.
If your inventory includes items for light manufacturing along with assembled items or kits, then it’s a good idea to track lot numbers, SKUs, and stock levels of each component, so that it will be easier in the case of having to purchase or return individual parts of kits and assemblies. To do this, it can be very useful to get rid of any outdated spreadsheets that you may have been using so far, and instead implement an ERP that you can use easily for light manufacturing and inventory management.
5. Treat Each Item DifferentlyIt’s a good idea to avoid the same treatment for all the products in your inventory. This is because different inventory items are going to vary when it comes to a few factors including the costs, valuation methods, and the level of customer demand. With a thorough ERP system, you can track various factors for each SKU including inventory levels, pricing, and lead times.
The system will also notify you when a certain inventory level reaches a minimum number, before automatically creating a purchase order to be sent to vendors.
6. Track Your VendorsIt’s a good idea to also consider using your inventory management system to track your vendors too. This is because as you are probably aware, not all vendors are going to be the same. A warehouse manager will usually be aware of which vendors they can rely on more than others, which items need to be received in the best condition, and how to handle any differences between expected and actual receipt dates.
It is a good idea to have an inventory management system in place that can keep track of this information. This will make it easier for you to get the information that you need quickly, rather than relying on other employees like the warehouse manager or purchasing manager.
7. Make Decisions With Real-Time DataYou can now implement powerful systems in your company that are designed to analyze inventory and sales operations data in real-time. Instead of using a range of different excel spreadsheets, these systems operate on a unified platform and have the ability to intake and compare a range of data regarding inventory levels, sales forecasts, purchasing costs, and more.
As a result, you can get a more detailed model of lot sizes, inventory acquisition, and requirements for manufacturing. Choose an inventory management system that unifies data from customers, manufacturing, eCommerce, and inventory to achieve faster acquisition, more streamlined allocation, and fulfilment, and increased profits.
8. Maintain Safety Stock LevelsWith statistical formulas, you can then go on to produce accurate sales forecasts before using the results to predict stock levels for each item that your company holds in inventory. Along with forecasting sales, it is a good idea to keep a minimum count in stock for each item and each vendor that you work with.
It’s a good idea to learn more about each vendor and take note of which ones take the longest time to ship their products. That way you know who to order more stock from so that you can maintain a good minimum level of stock at all times, especially if the product is popular. Basic inventory management or ERP system can help you track all this information easily.
Computer modelling can help with inventory optimization by ensuring you maintain optimum levels of inventory. The linked article contains more information.
Inventory management is a huge part of running many businesses, but lots of companies are still doing this manually with spreadsheets. By using centralized, automated tools designed for this purpose, you can save time and money, reduce human error, and streamline your inventory management.