Improving Your Inventory Management

July 3, 2019 6:18 pm

For any small business owner, the inventory that you have is a vital part of the supply chain, and such an important part of your business. It is what helps your business to keep running and if you don’t get the balance right, then it can have some massively dire consequences. If you have too little inventory, for example, then you can risk losing sales from customers, as delivery times can take a while, and you might have to go back to them to say that something is out of stock. On the flip side, if you have too much inventory, then you will need so much more of everything. All of your inventory will need some more space for it all to be stored, as well as more transport, more handling, more staff labor, and at the end of the day, more money to buy it all and store it all.

Even after you have figured out what the correct amount of stock to keep is, you will still need to work out the best way to take it from order to delivery, in a swift and smooth way. It isn’t just about getting the item from your warehouse to the customer, but it can also play a part in managing the large amount of information that is associated with those goods, so that you can keep them in order, to keep the process moving to the next, in a smooth way. So today’s post is all about improving your inventory, from storage to supply chain. When you get it right, it will help to keep your business doing well and keep your customers happy.

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Consider Inventory Optimization Tools

If you are able to implement some inventory optimization tools into your business, then you will gain some ground for your business as you will look to evaluate the entire network and determine the best policies for each product, and at every part of the supply chain. These things are usually stand-alone tools for software that will help to use data from the systems that you have. 

These optimization tools can take into account the variability in demand for things, as well as variability in supply, and can look into the parameters around replenishment, to be able to determine how much inventory you should be storing in order to guard yourselves against any variability. So if you want something that will improve the results, and will have pretty minimal human intervention, then it can help to execute it according to those results. It might take some time to get things up and running, but it can work quite seamlessly with the business systems that you already have. 

Check on Your Suppliers

You are likely to have suppliers that don’t always stick to what you have in mind or that don’t stick to the set schedule, or delivery what they have said. And this isn’t all just about timing of things, but also how well the fill rate is supplied. If you ordered a hundred pencils, for example, and when the order arrives at your door there are only ninety, then it shows that there is a problem. So it is really important to monitor these kinds of things, as well as monitoring your suppliers, regularly. Many systems to track this will show when something is received, when it was scheduled to be delivered, as well as the quantity and quality checks. These things are metrics that can be tracked and analyzed to look at how reliable a supplier is. If there are regular problems, then it is time to make some changes with your supplier, in order to improve things.

Improve Environment For Staff

No matter what systems you have in place, this is still an element of human error that is going to happen in business, and in your supply chain. But the good news is that there is plenty that you can do to help reduce this error. Some of this is going to come with providing a good environment for your staff to work in. For instance, if you have a factory or warehouse where these things are stored, then you will need to think about making that a great environment for your team. It could be that you look to make the environment comfortable, with an industrial extractor fan, comfy break room, and so on. Making sure that your team get things like regular breaks is really important too, as being tired, frustrated, or irritable can be something that can be a cause of human error. This goes for working hours too; don’t make them too long or having shifts that are too close together.

Don’t Treat SKUs the same

In business and inventory, there is no such thing as something that is a one size fits all solution. This is simply because all products are really different and they don’t have the same supply and demand pattern or variability. So it is a really good idea to focus on those things that are going to make up the most of your inventory, as well as making sure that you can maximize sales and profits.

Some items that you have in your inventory will be something that will be in more demand or will need to be targeted differently to fill the requirements for that category. Any fast-moving items should be filled at a high rate, and then keep going down the list accordingly, which is often referred to as service-level differentiation. The goal of this is to maximize the resources that you have on some more profitable products, while being able to minimizing the resources used on the less profitable items. It will then lead to having different forecasting and stocking policies, for example. 

Don’t Neglect Slotting

Being able to properly plan slotting will mean that you can not only deliver much needed space, but it will also locate the fast moving items closer to docks and to even more accessible locations. This can help to minimize the travel distance, as well as maximizing the overall output and productivity. Although, many companies do forget to neglect their slotting,

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