It’s crucial to evaluate your business on a regular basis to ensure that you’re on track to succeed. One key area of your business to monitor is your inventory management.
How has your business’s inventory management panned out? Have you had the right products available when you needed them? Did you lose out on business when items were out of stock? Or did you lose money due to excess stock?
We will discuss the cost of mismanaged stock, inventory management techniques, explain what to look for in good inventory management software, and go over some best practices for managing inventory.
“Money spent on inventory is money
that is not spent on growth. Manage it wisely.”
How does excess stock impact your business?
Due to the costs of warehousing, stock-taking, insuring, shrinkage and damage excess increases operating costs and decreases overall competitive advantage.
Lost opportunity cost; the money tied up in excess could have been used to purchase an optimal volume of saleable stock. The more frequently you do that in a year (turn the stock), the more cash and profit you generate. The longer the opportunity is lost, the greater the impact on the business.
The cash laying in multiple warehouses in the form of excess stock generates nothing of value. In fact, it will ultimately have to be provided for, written down, written off or even scrapped.
This impacts the bottom line and Management is usually reluctant to deal with it. Ignoring it does not make it go away. The impact just gets worse.
Manufacturers and distributors are aware of their need to improve their inventory management efforts in order to increase profitability. Balancing the pressure to maintain enough stock to meet the consumer’s needs without over-purchasing is tricky. The key is to stock smarter.
What Is a Warehouse Management System (WMS)?
A warehouse management system (WMS) is a software solution that offers visibility and insight into the day to day operations in the warehouse. This software helps businesses with the inventory management system, supply chain management and fulfillment operations from the distribution center to the client.
In today’s ever-evolving business landscape, consumers want to buy from the comfort of their homes. In order to be able to meet these needs, businesses must have the ability to respond quickly with warehouse management software that optimizes picking and shipping in line with customer demand.
An efficient WMS system can provide real-time information on products, inventory and operations. All of which can and will help you make strategic decisions to improve business performance.
But How Do I Manage My Inventory More Effectively?
Maintaining a centralized record of goods and assets requires a system. A warehouse management system (WMS) that comes with inventory management software can help manufacturers and distributors alleviate some of the pain involved with inventory management.
When you have a proper inventory management system, you have a single source of truth for all your products, assets, items in stock, and information of vendors and suppliers' whereabouts.
Inventory tracking software is designed to reduce the costs associated with inventory levels and improve inventory efficiency. So that companies can devote less of their efforts and hard-earned money to managing their inventory.
Key features your Inventory System should include:
- The complete categorization of products in stocks, which will make real-time management easier.
- The ability to measure product and stock levels to ensure sales and purchasing can be able to fulfill or replenish as needed.
- A historical record of all your inventory/products. This is especially beneficial in the case of recalling information for a customer or in the case of compliance.
- The barcoding module will alleviate human error, which often occurs due to manual data inventory counts. An added feature of scanning barcodes will save time and make order fulfillment faster and more reliable compared to manual pick and pack.
Want to learn more about a part of warehouse management that’s often overlooked in the quest for process improvement is picking and packing. Read our Warehouse Management Tips: Picking and Packing.
What if we have inventory across multiple storage locations?
We understand that you may have multiple storage spaces, which means the headache of the need to know your inventory levels at all. A cloud-based inventory management solution with multi-warehouse functionality used in conjunction with an inventory control system such as barcode scanners can greatly reduce the challenge.
By taking advantage of these forecasting and inventory management tools, manufacturers and distributors can achieve better inventory management and lead to improved customer serviced more profits.
Interested in gaining better control of your inventory? Please contact BAASS.
