There are a number of factors that contribute to how organizations manage their inventory processes. Smaller companies with a single location may find it simple enough to have one employee do a manual check and keep track of updates with pen and paper, or maybe even a simple spreadsheet. While that may “work” for small companies, it’s hardly efficient and, like the old adage of putting all your eggs in one basket, it’s not good business to rely solely on one person to manage all the parts and supplies that keep your company moving.
This can be even more complicated for larger companies, especially those with many locations and where inventory storage spans multiple sites — sometimes across states, countries, or around the globe.
And when we’re talking about inventory, we’re not just referring to your products and the related supplies to produce them, but to everything your company needs in order to do business on a daily basis. That could include everything from paper and ink, to cleaning supplies, to products and more.
So how do you keep track of it all? How can you ensure you always have insight into your inventory — no matter where it’s stored or who is responsible for tracking it — at all times? How can you make sure you have everything you need, both short and longer term, to keep your company resilient?
As we’ve seen with the coronavirus outbreak, we never know when an unexpected supply chain disruption could happen, and we always need to be on top of where our supplies are—and who they’re coming from and when—so we can circumvent issues that could cause stoppages or delays.
Here are 7 tips to help you streamline and automate all of your inventory processes to ensure operational resiliency and improved efficiencies:
- Toss the spreadsheets: Adopt and implement inventory management software that enables you to track, monitor, re-order, and process all of your inventory from within a single solution.
- Inventory your inventory: One of the biggest challenges for most organizations is no real insight into what inventory you have, what you need, and where it’s all stored. Begin with doing an inventory of your inventory. But this isn’t just a list of the who/what/where. You should also categorize all of your inventory for simplified management. Here are some of the areas you could consider:
- Item criticality: How critical is this item to your operations? What is the impact on operations if you run low or run out of this item? If this item is a critical item for resiliency, you should categorize it to reflect that.
- Cost and usage: You could also categorize your inventory based on cost and usage level. For example, one category could be lower-cost items that you use frequently and require routine or frequent re-orders. Another category could be items that are mid-level in costs, that need re-orders but not as frequently as the first category. A third category could be those high-priced items that you need, but do not have to frequently reorder (and which also may require a different level of review and approval.)
- Track your inventory: Once you’ve identified and classified all of your inventory, now it’s time to track it. There are a number of efficient ways you can do this, but you may find it beneficial to include the following information for each item for tracking:
- Product name
- Product type
- Lot and/or serial number
- Barcodes or near-field communication chips
- Vendor name, location, and contact information
- Location of inventory storage
- How/where item is used within your operations
- Responsible party
- Last order date
- Routinely re-inventory your inventory: How often you check your inventory levels may depend on a number of factors. While some organizations do it once a year, or once a quarter, you may find more routine re-checks to be more beneficial, for example, at the end of each month. With inventory management software, especially one that integrates with an enterprise resource planning (ERP) solution, you should always have insight into all of your inventory in near-real time. This makes inventory audits a breeze, and you can even create and share reports about inventory status at any time for more insight.
- Understand your sales lifecycle: Managing inventory only works well if you know how much you need at a given time to meet customer demands, including when to anticipate peaks and valleys. Take time to get to know your company’s sales lifecycle, including company and industry trends for sales and lead times. You can also improve inventory management by integrating your inventory management software with your customer relationship management tool, that way you’ll be able to make better data-driven business decisions and ensure the inventory you need is always available when you need it.
- Evaluate your suppliers: While many companies have good risk analysis strategies for their core functions, few remember to include suppliers in their risk evaluations. Each time you’re looking for a new vendor – or when you’re renewing or extending contracts with existing ones – you should do a risk analysis of each supplier. Just as you earlier determined which of your inventory is critical for operations, you’ll need to understand who supplies those critical parts, what risks those suppliers face for delivery, how they’re mitigating risks, and whether they meet all of your compliance and regulatory standards. If any of the vendors in your supply chain exceed the level of risk deemed acceptable by your company, you should replace that vendor with one with a more acceptable level of risk.
- Automate reorders: It’s frustrating, and sometimes downright confusing, to check your inventory and wonder why you have so much of a product you rarely use and so little of a product that you need most often. That’s often a result of people-managed inventory, where there’s incomplete or inaccurate communication about needs and objectives, or sometimes even just a missed entry on reorder. By adopting an integrated inventory management solution, you can eliminate the possibility of human error by configuring your inventory reorder parameters within the software and then letting the system notify you when it’s time to do a reorder — all based on preset conditions you can modify or update at any time. You should also use a solution that can alert you when products are on backorder so you can quickly adapt and use a different supplier as needed.
There are a lot more benefits of using an inventory management solution to take control of your inventory management tasks. From improving efficiencies, to saving you money, and reducing errors, you can always ensure you have the right products you need when you need them, and reduce overspending and overstocking for good.
Do you need help managing your inventory or would you like to know more about how you can integrate inventory management with your other critical business operations? Register now to save your seat in one of our upcoming webinars.