There are a great number of factors that go into the cost of managing inventory, not the least of which is supplier lead time. Long delays can lead to incurred losses for your business, including a dip in customer satisfaction that could impact your bottom line. To increase the likelihood of your products or materials being delivered on-time and in the right amount, try implementing one or more of the following strategies.
Order fewer products more frequently…
Ordering only once a month or less can result in a number of negatives, including overstock or under-stock situations. It also means you have to maintain an on-hand inventory for longer periods of time in between orders, which also costs money. Furthermore, larger orders tend to incur higher carrying costs. By changing to smaller quantities via more frequent orders, you can reduce the lead time in between deliveries and in many cases, also cut down on other expenses, such as shipping and storage. And by no longer carrying such a large quantity of inventoried items, you can free up space in your warehouse for other profitable uses.
Automate and centralize information…
Inventory management rarely involves only one department. In most cases, each order must pass through multiple hands before it is ultimately fulfilled. For instance, someone from sales will take an order from a customer and fill out a requisition that is then passed along to the warehouse group for processing. From there, the purchasing department might get involved to ensure timely and accuracy in ordering the necessary materials from a supplier to fulfill said order. Keeping tabs on this trail can be challenging and, as a result, can cause delays in lead time.
By leveraging technological advances, such as automation and inventory management software, the company will gain greater visibility and control over the process, which makes it more efficient and cost-effective.
Take advantage of forecasting…
You probably already use forecasting internally to determine what your future inventory needs will likely be, but you can also take this concept a step further by including the supplier in the forecasting process. By keeping suppliers in the loop through things like sales data and trends, they can better plan for your anticipated needs. This will lessen your chance of running out of an item or having to wait for an emergency shipment. In turn, this better planning will reduce costs and help you maintain higher customer satisfaction levels.
When it comes to inventory management, finding ways to save money is always a top priority. By taking the appropriate measures to reduce your supplier lead time, not only will you effectively bring costs down, but you’ll also achieve a more streamlined and well-run warehouse environment. This will keep everyone – from frontline employees to upper management, stakeholders and customers – happy and content with the way your organization is run, which means greater retention on all fronts.
Have a question about this or any other type of inventory situation? Give our experts a call at 800-441-7977 today. We’d be happy to help!