No business can instantly create products and furnish customer orders, and therefore, when it comes to streamlining your retail operations, warehouse procedures, and supply chain, the first thing that matters is efficient inventory management. Without proper inventory management software, you'll find yourself unable to complete orders. Moreover, customer experience and cash flow --the two most critical business aspects depend highly on inventory management.
The overall efficiency of your inventory management process relies on how you record, maintain and manage inventory. Therefore, you should know what exactly it takes to manage inventory successfully. This article discusses the top 5 steps and practices for successfully managing inventory. These steps and practices go a long way towards protecting your business from inventory disruptions and create an impenetrable moat around your business inventory.
Here are five steps to Successful Inventory Management:
1. Create a System to Get Accurate and Accessible Information on Your Inventory
The first step towards inventory management is to create, understand, document, and organize your inventory data. In a data-driven business world, inventory data management and accurate data analysis should be your priority. When done periodically, it helps in identifying slow-moving products, fast-selling products, damaged or waste products, missing or stolen goods. It minimizes interruptions to your business.
You can enter price information, SKUs, and other metadata along with excel sheets for creating a complete profile of your inventory. Also include advanced information such as on-hand inventory, open orders, lead-time, etc. You need stock sheets, barcode scanners, markers for this stage.
Once all the information is in place, you can integrate the excel sheet for exporting it to the inventory system. Here, you can take the assistance of software tools that automate products and inventory import from various feeds and databases.
#Protip: Avoid count duplication at any cost; otherwise, the whole exercise becomes futile
2. Create a Unique Process Customized for Your Business Type
A structured approach to inventory planning and well-defined standard processes help businesses to create a full-proof system that can readily respond to unpredictable customer demand and even scenarios such as supply chain disruptions.
Achieving inventory optimization while reducing variable costs requires judgment-based inventory planning and an effective inventory management policy. In short, you need a process that removes any constraints from resources, frees up capacity, and leads to accurate inventory levels.
The process must include steps to plan, execute, measure, assess, and improve the system.
You need a set and well-structured process for each--classifying inventory, categorizing it, barcoding, calculating inventory requirements, cycle counting, storing, warehousing, delivering, etc. You have to create a mechanism for access to the inventory, allotting authority/responsibility, scheduling, quality control, supplier relations, documentation, reporting, and many more.
Include suppliers, logistics partners, and freight forwarders in any process that you do, as any action on their part affects your inventory performance and fulfillment drives. Use modern communication tools to eliminate any lack of communication/collaboration between you and your supply chain partners.
3. Keep an eye on Contemporary trends in the industry
Trends and any alteration in their course can change the face of any industry anytime. Keeping abreast of the current trends in inventory management is critical to stay in business. Keep an eye on the latest happenings in AI, Distributed Inventory management, cloud solutions, automation, machine learning, predictive analytics, intelligent and hybrid warehousing, omnichannel inventory control, third-party logistics, data analytics, blockchain, AR/VR field, etc. Make sure your business can adopt new technologies and inherit new trends for unleashing more profits and easing the processes.
For instance, use machine learning for finding defective products, automated guided vehicles for moving inventory in the warehouse, cloud-based solutions for tracking inventory, predictive analytics for forecasting demand, AI for a personalized approach towards clients/suppliers, blockchain for managing distributed inventory, AR/VR for training warehouse employees, etc.
4. Be prepared for fluctuations in supply and demand
Continuous improvement is the trait that successful companies never give up. Amidst volatile business scenarios, quick data-driven decision-making, continuous assessment of current inventory practices, and relentless steps to enhance existing procedures are key to preparing companies for the bad times. During the pandemic-led disruptions in 2020, the overall value of retail products going out-of-stock reached 1,140 billion U.S. dollars worldwide.
To make your inventory cycle resilient to fluctuations in supply and demand, or disruptions in the supply chain, you need to make a flexible, adaptive, and autonomous system. Knowledge bases, trained employees, supplier relationships, and the right technology are key to sail smoothly during turbulent times.
Be prepared to deal with scenarios or create a system to avoid:
- Too much inventory
- Tracking Inaccuracies
- Data loss
- Limited visibility
- New Competition
- Inventory loss in spoilage/theft
5. Deploy an Integrated Inventory Management Software
Deploying inventory management software is the most critical step that supplements the other four steps discussed in the article. It is a complete solution for managing all aspects and things pertaining to inventory. In general, an inventory system records how many items have been sold, who they have been sold to, and how much inventory is currently available. An inventory software creates a workable system that keeps cross-functional teams, including the planning team, sourcing team, operations team, and warehouse team.
The inventory management system will assist you in:
- Managing, optimizing, and streamlining the above four steps
- Centralized inventory tracking
- Stock Auditing
- Multi-location inventory management
- Demand Forecasting
- Integrations with current trendy tech tools
- Ensuring smooth inbound and outbound flow of inventory
- Hedge your business against contingencies, raw material price fluctuations, etc.
- Enables you to use tied-up capital in stocks to diversify in other finance investments
Inventory management is a crucial determinant for business longevity, profitability, and customer experience. From creating a buffer between supply-demand uncertainty to decoupling for reaping benefits of economies of scale, inventory management is a prominent function of all product-based businesses. Successful Inventory management will help you reduce per unit storage rates, transport costs, and spoilage costs.
With tools such as inventory management application, logistics software, supply chain management systems, warehouse management software, etc., you can rationally structure your inventory. Utilize the benefits of the five steps mentioned in the article to create a robust inventory management system for your business.
Stock Sync is changing the game for e-commerce inventory management. With a huge number of integrations, your e-commerce store can now sync stock from various suppliers and sources such as Etsy, Walmart, eBay and more. Your intelligent Stock Sync app gets all your stock nicely fitted into a format and you can even set it to automatically download the latest stock items from your suppliers via download links. There are plenty of other features and functions that you shouldn’t miss out on as well. Head on over to the Stock Sync website to get your online shop synced up with the future.