It's no secret that companies that own inventory struggle to balance the competing interests of various stakeholders in the organization. On the one hand, the finance team wants to minimize the cash tied up in inventory, as well as reduce the carrying costs of that inventory. Industry standards indicate that carrying costs average around 25% for items such as insurance, physical counts, moving and storage and damage & obsolescence. These are all great reasons for minimizing the amount of inventory on hand.
On the other hand, the sales team never wants to run out of stock, which can delay or possibly lead to lost sales. From their perspective, the firm should hold as much inventory as possible, even if they need to rent temporary storage units to hold it all.
The person responsible for managing the planning and buying of stock ends up stuck in the middle of these two conflicting views. Typically this role is burdened with inadequate tools to manipulate the data. Thus, your resource may spend hours every day or week running reports, exporting to Excel, building macros or pivot tables; a very laborious and error-prone process at best. This is a significant issue because inventory is likely the largest asset on the balance sheet for these firms, and is often the lifeblood of the business. Recent studies have indicated that 42% of inventory-based firms consider excess inventory to be their biggest concern, while 37% list stock-outs as the biggest problem.
Proper inventory management is crucial to the efficient and profitable operation of distribution, manufacturing and retail companies. It is why many firms have already invested in support tools such as bar coding, warehouse management, multi-bin solutions, shipping automation, and EDI. These applications can help you count, move, receive and ship inventory. They let you know what stock you have and where it is located. But, they don't assure that you have the right stock in the right place. For that you need an inventory replenishment solution that helps you understand lead times, accurately forecast your demand, and place optimal orders from suppliers at the right time.
If that sounds familiar, then there are applications to assist warehouse professionals. Sage Inventory Advisor is one option worthy of investigation. Sage Inventory Advisor is a cloud-based tool that integrates with your Sage ERP system and addresses the challenges identified above. It provides an easy-to-use interface that utilizes a dashboard to highlight and focus attention on the most critical problems in your inventory now, and, importantly, the forecasting engine alerts you to the potential for additional stocking issues. It also helps the inventory buyers produce the best possible purchase orders in a fraction of the time of more manual methods.
The system can be rapidly deployed in only hours and is sold on a monthly subscription basis. This application is now in use by over 4,000 users at over 450 firms - managing nearly $2B in inventory. These firms have reduced their stock levels by 10% - 15% or more while improving their order fill rates from 2% - 10% or more. That translates to significant freed up working capital, lower costs and improved customer service and sales.
To learn more about Inventory Management and how it might help you to achieve optimum inventory levels, please contact us.