Companies cannot operate without effective inventory management tools and strategies. An effective inventory management strategy help businesses manage inventory and save money. Inventory management gone wrong has the power to break a business. Don’t be that company. Your company cannot afford not to have a comprehensive inventory management plan.
Benefits of Effective Inventory Management
Before we dive into the ways to improve your company’s inventory management plan, let’s explore the benefits of effective inventory management.
- Improves customer satisfaction by providing consumers with adequate inventory, ensuring accuracy of customer orders, and by offering the quickest service possible when fulfilling orders.
- Improves warehouse organization and fulfillment times.
- Helps track inventory movement so the company can make plans accordingly.
- Reduces order turnaround time.
- Boosts automation and reduces human error.
The best part about an effective inventory management strategy is: it saves your company money. Inventory management saves money on purchasing products, on processing costs and times, and on employee time and productivity.
8 Ways to Improve Inventory Management
Before you implement a new inventory management system, make sure it includes the following features: coordinated inventory oversight, establishes re-order levels, minimum acceptable quantities, understanding of turnaround times, safety standards, and a plan to move out stagnant, obsolete and/or outdated inventory. Check out the 8 ways you can improve your company’s inventory management plan.
- Embrace software to reduce costs
This is no longer a time for clip boards and monthly inventory checks. You need to remain up-to-date on inventory at all times, and inventory software can help you do so while saving your company money at the same time. Inventory management services and ERP software provides the business with the ability to free-up workers from physical inventory record-keeping. This allows them to work in less time and without the increased risk for error. Software also helps business owners and managers to prioritize company needs and cash flow based on the real-time data. NSA can help you.
- Use real-time analytics
Real-time analytics provides business owners and managers with the most reliable and up-to-date picture of the company’s existing inventory, inventory flow, trends, and more. It is easier to manage all real-time data when it is on a single platform. Digital inventory management systems provide accurate data amounts, with empowers owners and managers to keep orders as accurate as possible and to make ordering easier and cost-effective.
- Break down your inventory into different sections
Categorize your inventory for effective and efficient management. You will need to break down your inventory into three sections: safety, replenishment, and obsolete. Once you have identified the three inventory types your company houses, you can create a comprehensive plan to move it out, rotate it, and replenish it.
- Have a different plan for the SKUs
An effective inventory management plan does not treat all SKUs the same. You must identify and understand the supply and demand variabilities of each products and implement a plan that moves the inventory accordingly. Your resources should not be wasted on products that are less profitable.
- Use mobile devices
Mobile devices are transforming the way companies manage inventory. With a mobile device, companies can improve the relationship and interactions with the customer, track inventory changes and trends, replenish inventory, and make immediate decisions regarding inventory.
- Phase out stagnant and outdated inventory
As stated before: don’t waste resources on inventory that isn’t moving or cannot be sold. Have a plan of attack to understand why it still remains stagnant and develop a strategy to move it out so you can redirect focus on what does work and sell. Don’t ignore slow-moving or stagnant inventory; deal with it.
- Pay attention to the safety stock
Your company needs to count safety stock frequently, about 3 or 4 times per year. This helps your company make better decisions about the latest safety stock levels and its relevance.
To manage safety stock, use statistical data to maintain safety stock only for the necessary amount of time to protect the company and its inventory from distribution and manufacturing glitches.
- Get a comprehensive picture of all parts of the inventory
You can’t focus only on the inventory that is moving through the company. Your business needs a comprehensive understanding of all the inventory and their related systems. Instead of focusing solely on the finished product, figure raw materials, products, hardware, and more into your calculations. You must understand every phase of the process.