When it comes to inventory management, there are many theories, formulas, and techniques discussed in the trade websites and journals. But what works best is often a common-sense based approach that takes into consideration the realities of a typical warehouse.
Let’s face it: your team isn’t going to be using mathematical formulas to calculate goods in and goods out. Instead, they’re juggling myriad tasks, inbound shipments piling up on the receiving dock, and customer orders that needed to ship yesterday. They need information, tips, and techniques that offer a solid approach to inventory management without the jargon.
An ERP system that infuses inventory management software and tracking offer another common sense-based approach to managing a warehouse. With the right ERP and inventory systems in place, you’ve got the data upon which to build a sound plan for the day’s activities. Consider adding ERP and inventory management software to your systems to enhance productivity.
Common Sense Rules for Inventory Management
- You need accurate data for accurate forecasting. Take the guesswork out of forecasting inventory needs by adding an ERP system to your software plan. Mobile, cloud-based ERP systems can track real-time data and update systems accordingly. With accurate data, you can make better forecasts.
- Only make what you can sell. Gone are the product-centered days of pumping out widgets and hoping for the best. Today’s emphasis is on manufacturing and storing only what you can sell this month or quarter. By tightening up the reins on your manufacturing process, you can save on inventory management and warehouse costs. You’ll avoid tying up your capital in goods and you’ll have less to track.
- If you can’t sell it, stop making it. Use the data from your system to track sales. If something is consistently underselling, it may be time to re-assess whether or not it belongs in your product line. Although you may feel it is valuable, you must make business decisions based upon data.
- If you can’t stop making it, then plan on how to sell it. If you have a pile of raw materials already purchased and paid for, it may be difficult to stop manufacturing a particular good. The same goes for machinery that’s been set to produce a certain amount of product. It may be difficult to transition into new materials and goods. If that’s the case, and you see sales lagging, then plan an aggressive sales campaign to reduce inventory. Use forecasting tools to make your plans and bring sales and marketing into the process early on so that they have enough lead time to help.
- Unlike a fine wine, unsold inventory never improves with age. If it’s sitting around in the warehouse, it’s not doing you or your customers any good. More aggressive sales tactics may be needed to move it out to make room for the new. Don’t ignore unsold inventory, but make a plan to reduce it.
Inventory management is both an art and a science. With the right data at your fingertips that provide an accurate insight into stock levels and inventory counts, you’ll be able to use these common sense tips for better inventory management.
BAASS Business Solutions
At BAASS Business Solutions, we seek to help our customers improve processes to become more profitable. We take the time to understand the needs of your business and help you select software that will improve efficiencies, service, and profitability. For more information, contact us.