Inventory can be from bags of flour in the small storeroom of a local bakery to a million-square-foot warehouse stuffed with large crates of big-box chains. But in whatever the case is, accurate inventory management is crucial to every company’s success. In other words, inventory is the sum of all the goods that a company owns and plans to sell. If you are an apparel retailer, products become inventory when you buy and take possession of your suppliers’ shirts, suits, and dresses. These products leave your stock when you sell to customers. Inventory can be stored on-premises, at distribution centers, warehouses, or other facilities. The idea behind right-sizing your inventory revolves around properly managing your inventory. This means you have all the necessary and important products at the right place at the right time. This has been the backbone of your business for centuries and is vital to keep it going and growing. This article highlights important steps that help keep your inventory right-sized.
How Do I Ensure That an Inventory is Right-sized?
In a bid to ensure that the inventory you manage is right-sized, there are a lot of things you need to do and put in place for that to be a success. You have to carry out proper inventory planning to ensure that you do not overload your storage space and that everything in the inventory is traceable. It involves tracking supply, regular counts, and routine reorganization. It is important to note that this isn’t exactly an easy chore, but it’ll certainly become a success if the maximum effort is put in.
You must create a system that will provide maximum visibility and keep an eye on supply ordering, consumption and waste in every nook and cranny of the organization. Management is easier when you have a concise idea and record what you are doing. You can begin this by employing an accurate formulary responsible for capturing all the supplies in use by your organization at your best available contract prices. Ensure that this source is reliable and adequately represents all the approved products and prices for your organization. Inventory planning is no easy work. Suppose you suspect the slightest barrier to accuracy and automation. In that case, it is your duty to have all hands on deck to find the most effective method to help your organization normalize and standardize data. You could use an internal team or even outsource the responsibility.
Have Seamless Communication
If you manage an inventory, you should know that communication is nonstop. For every organization to grow and progress, good and uninterrupted communication throughout the organization is needed to keep people and all processes on track. You should use a solution to track and receive details of items that gain access into your facility and track these items’ consumption. This should also be extended across your entire organization. The communication in your inventory should be nonstop. You should be aware that it isn’t a one-time activity. That is why you should have a team that can notice and communicate to you about the items that access your facility and inform you how each of these items is being used. You should also ensure that you secure and close the loop on your internal communication processes so that outsiders cannot gain information on what is happening inside. You can do this by partnering with your members of staff to identify and reduce problem areas. This will help them know and understand how they can adequately carry out their responsibilities.
Cut Off Excess Supply
When you begin to properly keep records on your supply levels, you should endeavor to cut off excess supplies by working through surplus inventory. Make inquiries on new items and vendors you need to help future-proof your in-house supplies. After you have discovered all of what is needed, the next step you should take is to work towards curbing out your excess inventories; this is your fastest and immediate opportunity for inventory reduction and will aid in reducing inventory expenses when it is time to check and balance on your sheets, this will go a long way in improving your financial ratios. Many inventory managers and store owners also use the Just-In-Time strategy, which allows them to only receive products when they need them to avoid prolonged storage. You should also write off damaged, lost, and expired inventory so that you can get it off your books. This will improve cash flow and largely reduce obsolete products.
Ensure that you create a conducive environment to aid continual performance and endeavor to set measurable and realistic goals for yourself and staff members. You should also work hand in hand with your finance team to determine all the areas where tracking and reporting will deliver the greatest benefit to your organization. Take your time, think, make analyses and set specific and measurable goals. You can start this by measuring the cost of all inventory you have on hand, then take your time to compare the cost of supplies after 6 and 12 months of process improvement to validate how much you have improved. Assign a leader amongst your staff on the supply chain team and charge them with the responsibility of measuring success rates.
Reorganize Your Supply Areas
Take your time to create a vivid requirement map to maintain and identify supply storage areas. Have and properly arrange how products will be stored properly and reorganize the issues. You should also ensure that you organize items by their type and uses. Make products easily accessible to members of staff and also monitor how it is being used so that whatever they are out of can be easily replenished so that progress can be attained. Also, try to combine storage locations whenever it is possible. You could also relocate products and goods into well-organized and properly managed locations where they can be properly tracked and replenished accurately. You should also raise price awareness to help in identifying high-value items. You should also train all members of your team to help reduce overuse and waste.
Managing an inventory is demanding, and it requires a lot of effort, dedication, and an ample amount of creativity to keep things going as they should. Depending on the size of your inventory, you might want to consider getting tools and software to make the work lighter. However, with these steps and solutions proffered, your inventory will be in a great state for whatever comes next.