So you’ve got an inventory management system in place.
According to a study on the impact of inventory management practice on a firm’s competitiveness and organizational performance, that is good news. According to the study, higher levels of practice could lead to improved organizational performance and enhanced competitive advantage. But is your inventory system really and truly optimized to save you money, time, and also your sanity? Inventory management can only be as powerful as it is set up to be used.
Invest in an inventory management system
If you haven’t got an inventory management system, you probably realize by now that pen and paper or even using a spreadsheet – just doesn’t cut it. Choosing the right warehouse management system is half the battle. The right system consists of features that are relevant to your business. Relevant features will make life much easier for you and help you track your inventory. Some must-have features of reliable inventory management software include:
Centralized inventory management
Look for a system that allows you to connect all the aspects of your business. That will give you instant access to information and manage your business inventory from a single location.
Reporting of business activities
Reports play a vital role in decision-making, and they also help cut costs, improve profits, and increase productivity. The system must generate meaningful reports that give you a vivid picture of your inventory.
- Automation: Automating tasks (for example, automatically tracking various costs) eliminates the risk of human error when the inventory becomes too complex to handle.
- Flexibility: The system should be flexible enough to adapt to your business’s changing requirements.
Setting up an inventory management system is crucial to its success
You will find that getting the experts who created the software to set it up to work for you will be well worth the time and money. Understand how to use the software to your organization’s benefit – how to utilize the proper techniques and features – so you get the most from your investment.
Optimize your inventory tracking system
Assuming that you are starting from scratch and your inventory management system is new, a few simple steps can help you set up your inventory system.
- Create exact location names and label all locations where items might be stored.
- Create unique descriptions for each item, avoiding ambiguity.
- Use item identifiers (SKUs, product codes, UPCs, and part numbers). Keep these short, unique, and consistently formatted to avoid any pitfalls.
- If using units of measure (lbs, ea, pcs, bags, etc.), ensure they are formatted consistently and used appropriately.
- Ensure you have a proper starting count of all the items and their location before loading this data into your new inventory management system. Gather all inventory data that you might consider relevant.
- If not already in place, create inventory management policies and train your employees (those working with your stock and using the inventory system) to follow them.
Measurement is critical to understanding your system’s success
How do you know if your inventory management is working for you? The proof is in the numbers derived from measuring the success rate of your system.
Compare the data from before and after your inventory management system and new inventory management techniques are in place.
Is there a decrease in mis-shipments and mis-picks? Is there a decrease in out-of-stock demands? Is there a reduction in your dead stock? Have you been successful in eliminating dead piles from your warehouse? If you have answered yes to these questions, you are on the right track and have successfully optimized your inventory management system. You will soon notice better customer reviews, customer loyalty, and a boost in sales performance.