As disruptions and delays continue to impact the global supply chain, it is imperative to ensure that inventory is managed effectively. If you’re looking to improve your efforts, then here are 8 easy steps to help you along the way.
1. Record your material movements daily
To ensure operations run as smoothly and as efficiently as possible, it is important to record material movements on a daily basis. This information can be recorded in a spreadsheet format and be used by warehouse managers to gain a better understanding of the material flow in the warehouse. It can also be used to introduce solutions which will tackle operational inefficiencies and improve performance.
2. Build an approved stock list
A stock list is a comprehensive guide of all the products that your organisation has on hand and it allows you to effectively organise your inventory. Stock lists are dynamic and ever-changing to reflect customer demand. This enables you to identify the items you want to stock, which are then kept separate from items that are redundant.
3. Categorise your inventory
To ensure your inventory management process is as efficient as possible, you must categorise your stock as either fast-moving or slow-moving. As the name suggests, the fast-moving stock tends to sell very quickly and has a lower profit margin. You should keep large quantities of this stock on site in order to meet customer demand. It’s recommended that fast-moving stock should make up 20% of your inventory.
Slow-moving items still sell but have a very slow turnover rate. It is important to understand the average sale value and the order quantity of the slow-moving items to determine whether these items should be replaced with more relevant alternatives.
4. Pay attention to demand forecasts
Demand forecasts can be used to help you estimate the re-ordering schedule for recurring-usage items. Staff should undertake thorough training programmes so that they recognise the crucial role that demand forecasting plays in businesses. This can also equip staff with the knowledge to address errors and provide a full understanding of the demand forecast process.
5. Set clear minimum stock levels
You should be consistently aware of your site’s minimum stock levels. This can inform your decisions surrounding how much stock to order and will help to prevent overstocking and the costs associated. Minimum inventory levels can be calculated by multiplying the time it takes to sell a product by the average daily demand. It is also encouraged to allow a small amount of safety stock on site in case of delays or spike in demand.
Communicating with your clients or partners ahead of busy sales or promotional campaigns can help to ensure that you have enough stock to fulfil requirements. Of equal importance is the collaboration with your sales and marketing departments to identify any shifts in consumer behaviour.
7. Be prepared to adapt
With the current nature of the global supply chain and volatile customer demand, it is crucial that you are ready to adapt, to ensure profitability. This can include researching social media trends as they are likely to determine fast-moving and slow-moving products. You should also be aware of potential disruptions and harsh weather conditions so that a solution can be implemented as early as possible.
8. Consider automating your inventory management effort
Automated inventory management software can drastically improve the effectiveness of your inventory management and reduce costs. Our solution, StockAssist, has benefitted a vast number of clients from many different industries. StockAssist offers complete visibility and full control over your inventory to ensure a smooth, effective and profitable supply chain process.