As a business leader, you need to get goods to the final consumers to complete the production process. But to do that, there has to be a bridge between manufacturing and order fulfillment. This bridge in the supply chain is known as inventory, and it facilitates the movement of goods from manufacturing units to retail stores to fulfill customers’ needs.
Whether your business is small-sized, medium-sized, or a large enterprise, managing an inventory can be tricky. Indeed, efficient inventory management results from a combination of tech solutions and solid strategies. Adoption means there’d be a professional team in place, expert strategy, and the use of powerful inventory management software.
If you’re looking to optimize your inventory for efficient management, this article provides helpful tips and tech solutions.
Inventory Management: Meaning And Types
Inventory, in the literal sense, means counting or listing items. However, this definition is different from what it means in business administration. To business leaders and retail managers, inventory accounts for components, materials, and goods used in the operation of a business. It works like an asset for generating revenue.
Inventory management is, therefore, the storing, ordering, using, and selling of an inventory. Unlike inventory which is an account, management is a process. It consists of strategies and tools to keep raw materials, components, and goods in good shape to avoid glut and shortages.
While there are several forms of managing an inventory, there are primarily two types most business owners efficiently use. These two are:
- Just-in-time (JIT): As the name implies, this type of inventory works by storing goods and materials needed just in time of sales and delivery. That way, consumers can only get products in the inventory, and it doesn’t matter whether their demands are low or high.
- Materials Requirement Planning (MRP): This inventory management method relies on sales forecasts to create an inventory of goods. It’s based on accurate records and reports highlighting the rise and fall of consumers’ needs and demands.
There are other methods for managing an inventory. But methods should be cautiously selected to align with a company’s size, cost, and production capacity. Also, when inventory techniques frequently change, it’s likely to leave a dent in supply chain management.
Achieving Efficient Inventory Management
Achieving efficient inventory management is not rocket science; it’s the product of objective decision-making. From choosing the best software to understanding how your strategies work, you’ll need to make the most of your decisions. The following tips will help you achieve the required efficiency:
1] Plan And Prioritize Tech Solutions
The first step to efficiently managing your inventory is to plan and prioritize. Without a plan, tech is prone to fail and your inventory susceptible to shrinkage, which is the cash that goes to waste because your stocks are damaged or expired. But you can avoid this by using tech solutions, such as a barcode system, to categorize your supplies into priorities based on cost, location, and profits.
The most common categorization is based on profit, and it’s the ABC analysis. A-stocks adhere to the Pareto Principle, suggesting 20% of your inventory should generate about 80% profits. These items are prioritized first. B-resources bring in a quarter of your earnings. They’re essential but less crucial to A-items; so, they get the next priority. C-products are categorized last due to their lowest criticality to your inventory.
2] Adopt And Augment Tech
Your customers want their goods delivered to them within a day or two. Therefore, if you’re going to stay ahead of the competition, you’ll need to leverage technology to meet their needs and improve customer relations. Technological adoption helps your business stay on top of common inventory challenges by streamlining the ordering and tracking process for efficiency.
If you’re unsure where to start, you can begin with low-cost techs, such as free and open-source inventory software. You can also try mobile tech solutions that allow you to control and manage inventory from the comfort of your smartphone. Other tech solutions to augment include drones, wearables, and radio frequency identification technology (RFID).
3] Audit Inventory With Software
An inventory audit software measures your company’s actual inventory levels against its financial records. It is done to reduce shrinkage and storage costs typical to poor inventory management. A good inventory software indulges good practices to provide accurate inventory accounting and maintain inventory efficiency.
Given the massive size of some inventories, companies experiment with several audit procedures. Regardless of the dynamics, some of the best inventory management software is modeled after the following practices:
- Cutoff analysis
- Freight cost analysis
- Finished goods analysis
- Overhead analysis
Any good tools and applications will expertly optimize the practices and reduce the length and complexity of audits. However, you’d need to understand how the tools work and ensure they align with the objectives of your company’s inventory management.
4] Outsource Inventory System
Inventory management is essential to your business, but so is your time. To remain competitive and profitable while not compromising other resources, such as time, you should collaborate with reliable distribution partners to take care of your inventory. By doing this, you can focus on things that matter and leverage the freed-up resources and energy for business growth.
Aside from experience, inventory service providers boast sophisticated tools. Many of them are agencies with cloud-based inventory resources. They’re versatile in the field and have a range of networks that spreads across several niches. So, hiring them means augmenting their vast resources and network to achieve inventory efficiency.
5] Go Remote
Inventory management is a project. Several parties come together to make this project a reality. If you’re in charge of your inventory, it’s impossible not to have storekeepers, retail managers, inventory clerks, and auditors. Each party has a role to play, and the best way to keep the activities going is to move remote.
Remote inventory management means less commuting, more autonomy, and greater flexibility. It also provides your workers with a better work-life balance necessary for improved productivity. Moreover, it reduces office space in warehousing and staff turnover. Each benefit helps you achieve the required efficiency and realize better customer relations.
Inventory management is crucial to the supply chain of any business. It boosts sales and customer relations by reducing shrinkage and storage costs. However, efficient inventory management comes at the tail of objective decision-making regarding tech solutions. Therefore, you need to pay attention to them, align their solutions with goals, and ensure you’re leveraging their features and benefits.