Inventory-based businesses have many logistical and operational challenges to navigate, including how the inventory will be delivered, how it’s tracked, and how it reaches customers. Instead of taking a patchwork approach to improving operations (and delivering a better experience to customers), these retailers can instead turn to efficient inventory management as a comprehensive solution.
Efficient inventory management is the bedrock for a high-performing, optimized business because it dictates how every aspect of an operation functions. For example, it allows for the seamless flow of goods, accurate forecasting, and efficient processes (which can improve delivery times and the customer experience). By improving inventory management systems, inventory retailers can solve their biggest pain points, provide better service to customers, and even improve their bottom line.
This article will discuss everything you need to know about efficient inventory management, including how inventory retailers can improve their inventory management systems and practices.
Does Our Inventory Management Need Improvement?
Your inventory-based operation is up and running, and you have processes and systems in place which keep you going. Do you really need to deploy more efficient inventory management systems?
The short answer is yes. Any inventory retailer that’s operating today can benefit from more efficient inventory management systems, for two reasons. Firstly, there is always room for improvement in a business. Second, inventory-based businesses today are facing unprecedented challenges, which means that to stay successful, an organization needs to be using the latest inventory management systems and processes.
What exactly do we mean by that? Due to the complex nature of today’s supply chain, inventory-based businesses are operating in the face of rapidly changing trends and technologies. For example, consumer habits can quickly fluctuate, leading to sudden surges or drops in demand. It’s also the case that with digital buying habits, customers today expect speedy deliveries, and have a low tolerance for delays related to things such as stock outs or long lead times. Research has found that a quarter of customers will only consider buying an item if it will arrive in two days or less, while 60% of customers prioritize brands with next-day delivery.
What this all shows are that optimal inventory management is essential. Instead of producing piecemeal solutions to inventory issues (such as slow delivery times or stockouts), businesses can instead turn to more efficient inventory management solutions, which improve operations overall.
How Can Efficient Inventory Management Impact a Business?
When an organization changes its approach to inventory management to one that is more efficient, how can this impact the overall business?
It turns out that changes to inventory management directly correlates to business outcomes. For example, data reveals that solving issues of overstocking or understocking can lead to a 10% reduction in inventory costs.
Additionally, inventory management can play a crucial role in the success of the business. For example, studies show that companies that use integrated order processing in their inventory system are 25% more productive, and experience big boosts in both space usage and stock use efficiency.
When efficient inventory management practices and systems are used, businesses can streamline their operations, better forecast their stock needs, use advanced analytics to make decisions, and provide better service to both customers and shippers.
Best-Practices for Efficient Inventory Management Solutions
Implementing efficient inventory management solutions requires a multi-pronged approach, to tackle various aspects of your inventory-based business.
Here are some best practices you can use to improve your inventory management systems.
1. Utilize advanced inventory management software
The inventory management landscape is increasingly digital, and utilizing advanced inventory management software is one of the most effective ways of enhancing your operations overall. Some of the features and use cases of inventory management software include:
- Demand forecasting: Demand forecasting features can help you improve your inventory management and supply chain operations, by generating accurate forecasts which answer your most pressing stock questions. You’ll know what you need to buy, when you should buy it, how quickly you can expect inventory to move, and even if you’re on target to meet your service levels. Demand forecasting features also allow you to easily forecast events such as promotions or new customers, and even operate with sophisticated forecast hierarchies.
- Replenishment planning: Replenishment planning tools allow warehouse leaders to optimize their inventory management processes. You can do things such as generate purchase orders, transfer orders, and work orders with ease. You can also generate entire order schedules for your items, and you’ll enjoy the automatic adjustments for real-world factors (such as cycle intervals and holidays).
- Inventory analytics: Warehouse inventory analytics tools can help improve your overall inventory management efficiency, while also reducing operational costs. For example, with these tools, you can easily navigate stockouts, manage excess inventory (while suggesting inventory balancing transfers), handle dead inventory, and define and monitor your service level targets.
2. Leverage inventory tracking technologies
Efficient inventory management means tracking inventory comprehensively, in real-time. Your warehouse management system can help with this, by providing you with a 360-degree view and enhanced visibility into where your inventory is and how it’s moving in your warehouse. Additionally, other technologies can help with inventory tracking, such as RFID technology (with tags and readers) and barcode scanning systems.
Inventory tracking is crucial, particularly when dealing with third-party suppliers, deliveries, and pickups, because without the proper systems in place, inventory can become lost. By adopting these tracking technologies, inventory retailers can enhance their accuracy, reduce stock discrepancies, and ensure timely stock replenishment.
3. Streamline inventory processes and workflows
There are many different processes that take place in warehouses and other inventory-based businesses simultaneously, and which all play a role in efficient inventory management. These processes can include receiving, storage, packing, and shipping, for example. For a business to have an efficient inventory management solution, these processes and workflows need to be streamlined, seamless, and efficient.
Enhancing these processes might include developing new standard operating procedures, conducting audits to determine the effectiveness of the processes, and seeking feedback from employees and customers, to determine where improvements can be made.
4. Invest in employee training and education
Your inventory management practices rely on your team members. If they’re well-trained and able to execute effective practices, your organization will reflect that. Because of this, it’s necessary to provide employees with comprehensive training in different warehouse operations, such as receiving, storage, and packing procedures. If they use technology or have access to your warehouse management system, it’s crucial that they’re well-trained in these systems, and that they undergo regular refresher training as needed.
It is also likely useful to foster a culture of continuous learning in your organization. In this environment, everyone in an organization is operating with a mindset of ongoing education and improvement, and they’re open-minded about adopting new processes and technologies. This will also be an environment where ongoing warehouse optimization is present.
To facilitate a culture of continuous learning, you can encourage employees to stay updated on the latest industry trends, technological advancements, and best practices in warehouse management. You can also organize workshops, seminars, and online training sessions to foster a culture of continuous learning and development within the organization.
5. Monitor your efforts in an ongoing fashion
To ensure your inventory management solutions are truly effective, be sure to consistently monitor and audit your operations. You can use your inventory management technologies to track all aspects of your operations, such as your planning cycle time, service levels, and inventory levels. You can then use your data and analysis to determine if you’re meeting your service level targets, if your inventory is turning, and what your lead times are like, for example.
If your performance isn’t satisfactory, you can quickly intervene, and adjust.
Efficient Inventory Management and StockIQ Go Hand in Hand
Efficient inventory management is the core of a high-performing inventory retailer. And if you’re looking for a one-stop-shop solution that allows you to improve efficiency through enhanced visibility, then we’re here to help.
StockIQ is a supply chain planning suite targeted at manufacturers and distributors, which gives you the tools you need to run efficiently, improve forecast accuracy, and reduce inventory levels while providing unmatched service to your customers and shippers.
Find out how StockIQ can help you take your inventory management to the next level by contacting us today.
