Inventory is what keeps the world turning. All sectors of industry and the economic engine may operate thanks to inventories of raw materials, components, subassemblies, finished things, returned goods, and reclaimed and refurbished resources. All throughout the world, there are trillions of dollars’ worth of inventories in every imaginable shape and channel. Any company’s ability to maintain its inventory will determine whether it lives or dies. Cash flow issues brought on by excessive inventory can end in bankruptcy. A loss of business that cannot be recovered might arise from having too little inventory, which may cause a company to fail.
Inventory management is a crucial task that affects the financial stability of the balance sheet as well as the efficiency of the supply chain. Every firm works hard to keep its inventory levels at their ideal levels in order to satisfy its demands and prevent overstocking or understocking, both of which can have an adverse effect on the bottom line. Inventory management requires constant and careful evaluation of external and internal factors and control through planning and review.
Why Do We Need Inventory Management System
Most inventories were handled manually before computers became commonplace and there was no such thing as inventory management software. Manual inventory management is time-consuming, ineffective, and prone to error, even for small organizations. Unintentionally adding or omitting a zero might result in a financial nightmare and significant losses. For both large and small stores, the introduction of inventory management software has completely changed the game. Inventory management has wide-ranging effects on numerous departments as a part of supply chain management. By automating this procedure, accuracy and efficiency are introduced that were simply impossible to attain manually. If your company is still fiddling with spreadsheets and you’re still not convinced, let me explain why inventory management is crucial.
Why is Inventory Management Important?
1. Increased efficiency and productivity
Automating this process will result in time and cost savings. Keep in mind that manual inventory management is susceptible to errors, inaccuracies, and potential theft. When it comes to stock tracking and counting, let your software handle the grunt work. After that, you can concentrate on the areas of the company that do require human oversight, such as marketing, sales, and customer service.
2. Better control of stock levels
Overstock becomes a myth when a company has a system that tracks the amount of inventory and delivers alerts. An excessive amount of inventory can restrict cash flow and have an impact on a company’s working capital. Additionally, dead goods will generally cost more to store. Inventory management systems solve this issue by clearly stating what needs to be ordered, which lowers losses and boosts revenue.
3. Customer satisfaction and better sales.
Good customer service is supported by an effective inventory management system. You want your customers to have no trouble finding the things they require from you. The information about which products are available should be at your fingertips not locked in a spreadsheet. The worst scenario is for a customer to purchase an item and then find out it’s not available in the specifications they need.
A firm must turn away clients when there is a stockout (not enough inventory to meet demand). Poor inventory control results in unhappy consumers who become tired of the “out of stock” sign and may switch suppliers. The business will suffer as a result.
Ways to improve Inventory Management
1. Use waveless picking techniques
According to Supply Chain 24/7, one of the first steps to better inventory management is to switch from the wave-based method of traditional picking operations, complete with peaks and troughs, to a waveless strategy. Of course, updating your present systems and planning procedures is necessary before implementing a waveless strategy.
2. Utilizing drop shipping, reduce on-site stock
Eliminating it from your purview is the best method to increase accuracy and insight into your inventory. In other words, leave the shipping of online orders to the distributors and manufacturers.
Drop shipping gives manufacturers the option to send orders directly from the factory to customers, removing any worry about handling inventory in your facility. This eliminates the need to transport stock from one site to your location.
3. Data Gathering and Analysis
Data collection and analysis are necessary for an effective warehouse. Real-time visibility is really valuable, but if a company can’t plan for market shifts or seasonal variations in the hottest online trends, its inventory won’t meet standards.
4. Utilize technology to keep an eye on your workforce and monitor employee efficiency
Your labour management system must utilize technology (such as GPS sensors and wearables) to track staff movements and take into account industry changes. This gives a mechanism to evaluate their performance and guarantees worker security. Your business will gain from more labor-management technology.
5. Utilize WMS and other modern inventory management tools.
You are far behind if your warehouse management system (WMS) hasn’t been upgraded in the last five years. To benefit from new, real-time inventory visibility features, upgrade your current systems.
Additionally, a contemporary system supports automation, and it is crucial to employ automation whenever possible. When analyzing the employment of robotics in the supply chain for order fulfillment and repetitive tasks, Amazon was correct.
6. Integrate Systems
Depending on how your systems communicate, the last step in improving inventory management may or may not be taken. Different systems will lead to inefficiencies and data omissions. By integrating your systems and improving communication between them, you can avoid these issues.
