An inventory management system is used to track the flow of products in and out of a business. Your company can incorporate one primary inventory management system or utilize a combination of techniques, whichever best meets your business’s needs. Your inventory management strategies will allow you to create purchase orders and invoices, generate receipts and carry out inventory-related accounting.
Here are 10 common ways to manage inventory.
Lead time refers to how long it takes to reorder inventory. Suppliers vary in the amount of time they take to deliver products after an order is placed. Therefore, a useful inventory management technique is establishing lead time reports in order to effectively estimate how long it will take to replenish your company’s inventory.
Another effective inventory management technique is to utilize the help of suppliers. This is known as supplier-managed inventory and gives vendors access to distributors’ inventory data. In turn, suppliers generate purchase orders according to distributors’ needs. This is effective for distribution-intensive companies in that utilization of vendor-managed inventory controls eliminates data-entry errors, making time-management of purchase orders efficient.
Monitor Inventory Levels
A major contributor to expenses and overhead costs is high levels of inventory. Therefore, an efficient technique to manage inventory involves determining inventory demands of the business. Limiting seasonal inventory and cutting back on inventory that doesn’t move well is a good tactic for cutting costs.
Inventory Control Personnel
Another effective tool to manage inventory is by hiring an inventory control specialist. An inventory consultant will oversee merchandise items that are both physically available and in transit. Inventory management specialists will manage returns, perform adjustments, confirm received merchandise and utilize inventory reporting strategies.
Outsourced Inventory Consulting
Many companies opt to hire inventory consultants from outside the business who develop and manage an organization’s internal inventory system. An inventory management service will maintain accuracy, count cycles, manage the shipping and receiving, and oversee order-picking operations.
Work in Progress
Some businesses are successful at managing inventory by tracking items as they move from one operational stage to the next. Some companies use some inventory units to create other products. Developing a tracking system for "work-in-progress" materials enables organizations to prevent inventory from getting so low that it slows production by adjusting order amounts.
Many companies create tracking systems for managing inventory and monitoring turnaround times. These tracking systems may include computer programs or spreadsheets and provide comprehensive inventory control that allows businesses owners to take cycle counts and organize item levels in stock rooms and distribution centers.
All organizations have products that sell, as well as products that don’t. Therefore, establishing an inventory system for pinpointing which products move and which don’t is usually highly effective.
Another way that companies manage inventory is by developing an inventory management database or investing in inventory management software that enables distributors to personalize a database to fit their specific needs.
An efficient inventory management tool can help in measuring inventory turnover and effectively estimating delivery turnaround time. This technique involves measuring how often items sell and the amount of time it takes to get them to your customers.
Are you hoping to streamline your inventory services? The tips above can help you establish a program that works for you and helps keep your business running smoothly. From establishing lead time reports to properly estimating customer delivery, there is sure to be a system that meets your needs.