When running a business, there’s one aspect that’s crucial to perfect: inventory management. Whether you’re running a small or a big business, there has to be that perfect balancing act with your inventory. It means having enough stocks on hand to meet and consistently fulfill orders, but the extra stocks shouldn’t be too high to the point of causing so much wastage.
Meeting the optimum level of your inventory is like walking on a rope. It takes a lot of caution and practice to perfect such that you’re able to streamline your inventory management processes. Fortunately for businesses today, you aren’t alone in this pursuit. Technology is there for you to use with consistently training your supply management team to achieve optimum results. A simple way to achieve this is by using professional software like source to pay that connects sourcing with contracting, purchasing, invoice validation, and supplier payments in one simple system.
In this article, you’ll come across these six powerful tips on how you can streamline inventory management. These are important, given how inventory management is recognized as a critical key to success.
1. Maintain Safety Stock Levels
Maintaining safety stock levels means your inventory has enough extra in case the demand suddenly increases. However, those extras aren’t kept to the point where there’ll also be a high amount of waste or excess due to keeping too many extras.
Streamlining your business’ inventory management is starts with streamlining inventory management. It means using statistical formulas to provide an accurate sales forecast of the demands. Along with forecasting the sales, streamlining inventory also means keeping a minimum in-stock count for each product offered by each vendor.
For instance, you know that this particular supplier takes longer to ship and fulfill your orders. Therefore, a good idea always to order extra from that supplier to avoid any shortages in your stocks.
2. Track Your Inventory
The goal of streamlining your inventory management can never be achieved if you don’t make that effort in tracking. The faster your inventory moves, the more you’ll have to track and monitor it. There are several efficient ways you can track your inventory. Whatever means you employ, be sure to keep a record of the following information:
- Last order date
- Product name
- Supplier
- Product type
- Location of inventory storage in your warehouse
- Lot and/or serial number
- SKUs
3. Use Real-Time Data To Make Decisions
Always use real-time data in making decisions concerning your inventory. There is now powerful software that enables you to analyze data and track sales operations in real-time. It is a break from using several excel spreadsheets, when in fact, you can now opt to have a unified platform to keep data in place.
For instance, tracking real-time data allows you to have information on the current inventory levels, sales forecasts, and purchasing costs. Making decisions based on real-time data enables you to make unified decisions for smoother inventory management. In effect, profits may increase as well, through better business operations.
4. Leverage Smart Tech
Leveraging smart tech is now a necessity more than just something you may or may not do. The reason behind this is that technology is there to make processes smoother and more accurate. Just imagine how much time you can save by using the latest technology in inventory management rather than maintaining the manual recording system you’ve used before.
For instance, many businesses use barcode technology to automate inventory management. With barcodes, you can scan the goods that come in and out of your warehouse in real-time. It enables you to have a quick and accurate record of your stocks. This automation system in your supply chain is also key to increasing your business’ overall operational efficiency.
5. Understand The Different Types Of Inventory
The fifth powerful tip listed here entails going back to basics from time to time. Especially when you consistently have new hires onboard, your supply chain or warehouse team, it’s important to regularly get to know and understand the different types of inventories you’re keeping.
This step is very important to have valuable and accurate information on which inventory falls into the same category. This accurate grouping also enables you to manage your inventory accordingly.
- With that said, these are the x different types of inventories you’ll come across: Buffer inventory, also known as the safety stock. It refers to the stock you keep as a cushion for any unexpected issue that may arise or the need to have more inventory;
- Raw materials, if you’re in the manufacturing business and you regularly store raw materials to manufacture your products;
- MRO goods, which also stand for maintenance, repair, and operating supplies. These are used as support materials during the production process;
- Unfinished products, or the goods which are still a work in progress and aren’t yet ready for selling;
- Decoupling inventory refers to the goods or products you keep which you set aside in the event of a stop in the production or the anticipation of a slowdown.
6. Practice Good Communication
Communication is key even as regards inventory management. And when your goal is to streamline your inventory management processes. This communication shouldn’t’ just be within the inventory department; it should also be a communication from the inventory department to others in your business.
If your supply chain and inventory department haven’t been operating smoothly as of late, the culprit might be the lack of good communication across departments. It is also where good inventory management software comes into the picture. A good app or software will have numerous features – communication included. It makes for smoother and more optimized operations.
Conclusion
As you can see, inventory management is a defined process using both the expertise of man and the proper tools to aid in this purpose. Note that inventory management is more than just about keeping enough stocks on hand. It’s also about achieving the best time to order and stock up on a business’ materials and products. Streamlining inventory management is a lot of effort. But, it’s worth it when the exchange is continuously satisfying and fulfilling your customer’s needs and demands. If you feel your inventory management has room for improvement, the tips above can give you a powerful start.
