More and more manufacturers and distributors are starting to understand that adopting the best practices in inventory management is very important if they want to survive these tough economic times. A business owner who encounters different issues, such as delayed customer orders, inaccurate inventories and high return processing costs, should look into inventory management best practices to understand how to make the most out of implementing them.
A very important aspect businesspeople should pay attention to relates to the fact that inventory management best practices, which can help organizations become more productive and efficient than before, gravitate toward stock control, quality control and cycle counting.
Maintaining stocks as low as possible can help a business slash superfluous costs associated with holding high stock levels. This leads to cash flow increase, which is very important for overall business operation. However, the amount of stock a business should keep depends on its size and nature. For instance, a company that delivers fresh foods has different inventory needs compared to a textile manufacturer.
While certain inventory management best practices advise businesspeople to analyze the inventory chain based on particular criteria, such as seasonality, sales patterns and past turnover, others focus on getting a comprehensive business management solution, such as an ERP system, which comes along with advanced productivity tools, manufacturing capabilities, purchasing features and accounting functions.
Certain inventory management best practices link to quality control. Employees should be provided with checklists and/or computing systems that can assist them in following proper procedures when checking the goods they receive. All goods must be examined for signs of damage, including leaks, tears, or broken seals; discrepancies in descriptions – product colors, styles, and sizes must be identical to purchase orders; and prices and terms of sale. If product quality is lower than agreed upon, the merchandise should be returned to suppliers. This measure not only avoids unnecessary increase in stock levels, but also prevents employees from offering customers inappropriate merchandise. If products meet the required quality standards, employees must consider particular factors, such as light, humidity and temperature, in order to avoid damaging the merchandise kept in warehouse.
Some of the most popular inventory management best practices relate to the implementation of a cycle counting program. Before implementing this program, a manager should consider several aspects, such as counting frequency, counting strategy, and persons in charge. To take the right decision regarding counting frequency, it’s important to calculate how many counts employees can perform per year. Furthermore, the manager should focus on the effects of cycling counting on the manufacturing, receiving and delivery process. Afterwards, the management team should develop an appropriate counting strategy based on particular cycle counting methods, which typically divide stocks by location, category, item, or value. Last, but not least, identifying someone who wants to take the responsibility for ensuring that the cycle count system works as planned is crucial in order to get the best out of implementing such a program into an organization.
In conclusion, the main role of inventory management best practices is to help businesses optimize their stock levels – a critical aspect for any organization trying to adapt to ever-changing consumer demands. Thanks to these practices, more and more companies succeed to boost their operational efficiency, offering their customers exactly what they need, when they need it.