We’re living in a globalized world. So, it makes sense that more and more businesses are developing an international supply chain and taking advantage of its many benefits. If you’re already international, or are thinking of heading in that direction, make sure you keep doing inventory management right.
Inventory management, or the management of your most important assets, is an essential part of business operations. At the best of times, it can be a complicated feat. Add in multiple locations, different countries, even different continents, and things can get even trickier. Small mistakes can cost big money, or on the flip side, there are small changes that could save you a lot of money. Keep these seven things in mind when going international with inventory management.
1. Fine tune your inventory forecasting methods
Inventory forecasting is all about predicting how much inventory you’re going to need to keep fulfilling orders on time. Depending on which inventory management technique you use, you may have to make some international adjustments. While some aspects such as trends and base demand stay the same, your overall re-order points and EOQ (economic order quantity) may need to change to adjust for shipping times, customs clearances and extra landed costs.
2. Keep the holidays in mind...all the holidays.
Seasonality is a major factor when you have international suppliers. If your business is based in Australia, but you have a supplier from Indonesia, Christmas may be your busiest time of year, but Idul Fitri will be the biggest time for the supplier. Make sure to sync up your holiday schedule to include when you’ll need to order more inventory than usual, and when your inventory lead time may be affected. But hey, this international aspect means you get to celebrate holidays from both countries, which, in the end boils down to one thing: more cake!...right? Speaking of lead times...
3. Re-evaluate lead times
Lead time is the amount of time you need to take into account, from the point that you order your inventory until you actually receive it. It should include supply delay (as in, the time it takes for the supplier to send it to you), and reorder delay (or the extra days until you actually create another order for that inventory). As expected, if you change your supplier from local or regional to international, your lead time will increase. This change in lead time is an essential part of your inventory control and overall supply chain management - make sure to readjust.
4. Choose your supply chain partners carefully
Not just for the product, but for the relationship you have with the suppliers, manufacturers or wholesalers. Especially when they’re intercontinental, relationships with suppliers can be essential to getting the goods on time and in the condition you need them. Choose a supplier that you truly feel comfortable with to get a good response. Also, make sure you trust them. Trust, an essential part of any long-distance relationship, can save you a lot of time traveling back and forth between suppliers, manufacturers, and warehouses.
5. Find a local consultant
It’s always good to have feet on the ground wherever you’re warehousing or producing. If not a fulltime local contact, it should at least be someone who knows a lot about the laws, taxes and customs of the country. For example, knowing the inventory holding costs in one country can save big bucks, and can help you decide how to adjust your inventory management techniques to best take advantage of the costs of holding in each country.
6. Do your research
Even if you have a consultant on the ground, do your research on the location that you’re warehousing/manufacturing/whatever in. Knowing the basics about each country helps you make better inventory management decisions. Do a bit of research, using resources (like this eBook) to help you get the basics on wherever you’re expanding to.
7. Move to the cloud
I know, you think we’re just saying this because we are a cloud-based software, but it’s really true. When you have multiple people in multiple time zones and locations, excel spreadsheets that need to be updated and shared manually just aren’t going to cut it. With a cloud-based system, inventory amounts, purchase orders and other information are updated in real time, so you can be sure you’re never fulfilling an order that will lead to an inventory shortage down the line, or even worse for your customers, committing to an order that just can’t be filled right now.
Cloud-based software makes all your data accessible everywhere, no matter where you are, or what device you’re using. When you’re juggling multiple factors, putting it all on the cloud means that if your computer, spreadsheets, or hardware melt down, your global inventory management stays intact.
Take these seven tips and apply them to your global supply chain - and see how much better things get from here. Anything we’ve left out? Let us know in the comments.