Inventory Management Best Facility Practices
Best Practices of Inventory Management
Are you constantly struggling to keep track of your stock levels? Does inventory management sound cumbersome to you? Something that leads to costly stock-outs or excess inventory? If yes, then you’re not alone! Managing inventory in facilities can be a wild ride.
But fear not, because, with the right tools and best practices, you can make the process smoother and more efficient. Fasten your belts as we are about to navigate some of the best strategies in inventory management that will help you in staying afloat. Let’s dive in.
What do you mean by Inventory Management?
In any facility, be it a warehouse, factory, or retail store, efficient stock management is indispensable for smooth operations and maximum profitability. Inventory management encompasses activities related to tracking and management of all the materials (raw, semi-finished and finished) that a business uses or sells.
Effective inventory optimisation requires an understanding of the company’s goals and objectives, as well as the right tools and practices. Let’s catch a quick glimpse of a few inventory management best practices.
Accurate Tracking for Inventory Management
Accurate inventory tracking is one of the most crucial practices for effective inventory management. It’s about having the numbers at your fingertips- stock on hand, where it is located, and when it needs to be replenished.
Without accurate tracking, the consequences can be deleterious. Businesses may overstock, leading to higher carrying costs, or run out of inventory, leading to missed sales opportunities.
Wondering how to bring precision to the tracking system? You can choose from a myriad of inventory optimization software. These software systems use barcode scanning or RFID (Radio Frequency Identification) technology to track stock movement in real-time, reducing the chances of errors and ensuring that stock levels are always up to date.
Set Inventory Reorder Points and Order Quantities
A reorder point can be defined as the minimum level of inventory that triggers an order to replenish inventory. Order quantity is the number of stock ordered when a reorder point is reached.
An inventory management software can help businesses set reorder points and order quantities based on historical sales data, lead times etc. By automating this process, you will always have enough inventory on hand to meet customer demand while minimizing carrying costs.
Implement Cycle Counting for Inventory Management
Ever heard of cycle counting? Cycle counting refers to the process of counting a small portion of inventory at a time throughout the year instead of conducting a full stock count at the end of the year. This technique helps in keeping the inventory data up to the minute.
Businesses can use the latest technologies in inventory management to implement cycle counting. You just need the right software in place to automate the process of selecting which inventory items to count, scheduling counts, and generating reports on inventory accuracy.
Track Inventory Costs
Tracking inventory costs is of paramount importance when it comes to making informed decisions about pricing and purchasing. Stock costs comprise the cost of goods sold, shipping, handling, and storage.
Long gone are the days of manual calculations. You can now record inventory costs by automatically calculating costs based on purchase orders, sales orders, and inventory movement. This allows businesses to monitor their margins and make adjustments to pricing or purchasing decisions as needed.
Integration for Efficient Inventory Management
Integrating stock management software with other systems, such as accounting software or point-of-sale systems, provides an all-encompassing view of the business’s operations. You can easily integrate your stock management system with other systems using APIs (Application Programming Interfaces) or pre-built integrations. This helps in automating data transfer between systems, reducing manual data entry and the chances of errors.
Train Employees for Inventory Optimization
Employees who handle inventory should understand the nuances of the inventory management software, knowing its ins and outs.
Training can be provided through in-person sessions, online courses, or on-the-job training. It is essential to provide regular training and updates to ensure that employees are using the latest best practices and are up-to-date with any changes in inventory management processes.
Keep Inventory Organized
Keeping inventory organized is yet another best practice for efficient inventory management. By organizing inventory by product type, SKU, or location, businesses can easily locate products, you can reduce the chances of stock-outs, and improve inventory accuracy.
Forecasting Demand for Inventory Management
Demand forecasting is important for businesses to plan their stock levels accurately. By analysing historical data and market trends, businesses can estimate future demand and adjust their inventory levels accordingly. This can help businesses avoid stock-outs or excess inventory and improve profitability.
Use Barcoding or RFID Technology
Barcoding or RFID (radio-frequency identification) technology helps businesses automate their inventory tracking processes. By using barcoding or RFID tags, businesses can quickly and easily scan inventory and update inventory levels in real time. This can help businesses reduce manual errors and improve efficiency.
Implementing Safety Stock
Implementing safety stock ensures that you always have enough inventory to meet unexpected demand or supply chain disruptions. Safety stock is defined as the extra inventory that businesses keep on hand as a buffer to prevent stockouts. By setting aside safety stock, businesses can reduce the risk of stockouts and maintain customer satisfaction.
As businesses expand, their inventory management needs become more complex. This calls for a better inventory management system. You can implement new technologies, such as cloud-based inventory management software, automation, or advanced analytics at your facility to stay ahead of the curve.
What are the Top Inventory Management Technologies in 2023?
Here are some technologies that can help businesses improve their inventory management system:
Cloud-based Inventory Management Software
Cloud-based inventory management software enables businesses to manage their inventory from anywhere and everywhere with an Internet connection. It entirely eradicates the need for on-premise servers and software, reducing IT costs and improving accessibility.
In addition, this technology also provides real-time inventory tracking features, automates order fulfilment, and integrates with other systems, such as accounting software and e-commerce platforms. Fascinating, isn’t it?
Automation enables businesses to streamline their stock management processes and reduce manual labour. For instance, automated picking and packing systems can increase order fulfilment speed and accuracy, while automated inventory tracking systems can reduce the chances of errors and improve inventory accuracy.
You can leverage advanced analytics to make data-driven decisions and streamline your stock management process. For instance, predictive analytics can forecast demand and help businesses make informed decisions about inventory replenishment and pricing. Moreover, business intelligence dashboards can provide a visual representation of inventory data, making it easier to identify trends and areas for improvement.
Mobile technologies, such as barcode scanners and mobile apps, can help ameliorate inventory accuracy and efficiency. Barcode scanners reduce the chances of manual data entry errors, while mobile apps provide real-time inventory tracking.
Inventory management is the bedrock of any business operation. By implementing best practices in stock management and leveraging technology, managers can streamline their inventory processes at facilities, reduce costs, and improve their bottom line.
Cloud-based stock management software, automation, advanced analytics, and mobile technologies among others can help businesses achieve these goals.
Are you still thinking? We offer the ultimate solution to streamline your inventory management processes and adopt all the best practices in one interface. Say goodbye to scattered data and manual errors, and take control of your inventory with ease.
Contact us for a free demo of how our expertise can help you achieve your business goals to the best.