Inventory management is an integral segment of every business. Storage efficiency is a crucial aspect that determines your supply chain value. Even, a slight negligence can break your business. Inventory management is not as simple as it sounds. Planning, preparation, and execution need to be done cost-effectively to ensure timely delivery, quality control, and quality assurance.
As the business grows, real-time inventory management is necessary to accelerate distribution logistics. Streamlining warehouses and stock availability for the future market is crucial to leverage profit and sales. Framing new strategies and keeping pace with changing consumer demands are necessities of the time. Utilizing technology and automated services can help you make your inventory management process easy and hassle-free.
Strategies to Optimize Inventory Management
Keeping your stock level stable and increasing the pace of your delivery is the success formula for every retail business. For that, you need to frame plans and strategies. Are you confused about what to choose and how to implement it? Well, here are some tried and proven inventory management strategies you must check to improve your business turnover and reputation:
1. Get Your Hands on ERP Solutions
Businesses that manage complex inventory challenges need an integrated system to control finance, order fulfilment, inventory, and other logistics operations. ERP or Enterprise Resource Planning system is a well-structured solution that enables a single platform for all logistics operations to maintain equilibrium in the supply chain performance and reduce time and money spent on various locations and resources.
Some of the crucial benefits of integrating ERP software into your business include:
Automatically notifies product demand when orders are placed helping supply chain managers meet customer requirements and prevent stock unavailability.
Helps in automating communication and other warehouse operations through an advanced radiofrequency system or barcode scanning systems.
Reduces manual errors in billing, shipping, and document management through digital records.
Gives you total control of the supply chain system and helps in the decision-making process through transparency in operations.
2. Implement Just-In-Time Inventory Management System
An exact prediction of customers' requirements is necessary to replenish warehouses with products that are in demand. Stockpiling in warehouses is always a challenge. It consumes money, and storage space and makes it difficult to control defect rates. But, Just-In-Time Inventory Management is an effective strategy to monitor actual customer demand and eliminate surplus products with an expiry date.
Maintaining a balance between customer orders and production is a must to bring out sustainability in business. Moreover, enhancing the Just-In-Time inventory management system improves product quality over time and polishes your relationship with vendors as the business grows.
You can easily implement a JIT system into your warehouse by following a few steps:
Design a warehouse layout that decreases the space and reduces the distance between various operating sectors.
Make sure the equipment and technology are up to date, without frequent breakdowns. Strong operational amenities are required to boost the implementation process.
Automate the warehouse to eliminate order fulfillment errors. Automation helps you carry out accurate demand forecasting.
3. Utilize Safety Stock, Buffer Stock, or Anticipated Stock Inventory Management System
No customer is going to wait till you replenish your inventory. There are a lot of competitors who are ready to offer similar products and services. So, keeping pace with the rise in demands without much waste accumulation is the need of time.
Well, exploring the possibilities in safety stock, buffer stock, or anticipated stock can stop you from going out of stock. Let's see how it can help us deal with the various stock crisis:
Unexpected surges in product demands can sometimes cause you great business loss. Safety stocks help you bring the amount of inventory needed to prevent stockouts and save you from demand uncertainty and lead time uncertainty.
Buffer stocks and safety stocks are almost similar. Both are surplus inventories maintained to mitigate unprecedented fluctuations in demand. Specifically, buffer stocks protect your customer from disruptions in delivery.
Anticipatory stock is also surplus inventory. But, instead of compensating for uncertainty or shortfall in demands, it is all about preparing for seasonal or festival sales.
Extra stock arrangements are always a boon unless it becomes a waste. Trying out these safe and secure stock management procedures will help you utilize the stock without wasting resources.
4. Employ Mobile Technology & Software Solutions
Mobile technology and software solutions can automate a lot of things in warehouse management. Bluetooth Technology, IoT enabled sensors, and radio frequency identification (RFID) tags are some of the warehouse technologies that help to reduce manual errors & employee travel time and amplify inventory management. The new voice picking system in warehouses is a great hack to regulate and control volumes of stock without any manual labour. It helps to direct employees to bring accuracy in load picking and eliminate delivery mishaps.
Some of the advantages of mobile technology include:
Accuracy in communication and information flow
No hassles of double entries
Offline storage access and real-time transaction
Transparency in operations, cost-effectiveness, and saves time
Ensures employee safety and productivity
5. Inculcate Batch Tracking Model
Grouping and monitoring inventories that share similar properties can help to improve product visibility. Identify expired inventories and defective items in the storage unit. Here are some top-notch methods to strategize batch-tracking model inventory management:
FIFO Warehousing Technique
The first-in-first-out inventory management system is as simple as it sounds. The products that come first to your warehouse leaves first considering their expiry date or shelf life.
LIFO Warehousing Technique
The Last-in-first-out inventory management system is recommendable if you have non-perishable products with longer shelf life. You can easily prioritize the last approached inventory according to the demand value.
6. Use Data Analytics to Forecast Supply Demand
Surplus inventory and stockouts are issues that can decrease your total revenue. Performance analytics is a critical factor that can help you address this issue. Understanding customer behaviour and gathering insightful data on product review and market demand is necessary to:
Keep a track of inventory requirements
Enhance stock optimizations
Reduce product recalls
Boost fulfilment logistics
Big data is an integral segment of logistics. How you organize your stock according to market fluctuations defines your success. And, Big data helps to manage data flow within the logistics cycle by enabling data security and boosting transparency.
Benefits of Optimizing Inventory Management System
An inventory management system is crucial for every business to ensure consistency and accuracy in performance. Here are some crucial benefits of an inventory management system to understand the importance of inventory management:
An optimized inventory management system helps to organize the warehouse for hassle-free product flow. It also helps to strike a balance between inventory availability and product demand through real-time tracking and forecasting.
On-time delivery is the key to customer satisfaction. A well-structured inventory management system helps set the tone of delivery without causing stockout issues or other technical & manual glitches.
Ensures waste elimination and keeps up with the green trends through big data-based performance metrics. Now, you can easily predict the product requirements and market fluctuation to manufacture products according to actual customer demand.
Above all, inculcating an inventory management system helps to build a better relationship with suppliers and vendors. Easy accessibility to inventory data and related metrics provide better insights to negotiate prices and other terms & conditions.
Maximise Profit & Quality in Supply Chain Through Inventory Management System
Today, inventory management has become a significant part of the value chain that determines the future of every business. Growing businesses need an effective inventory management system to analyse, track and assure quality in delivery. Adopting the best inventory management system by understanding the volume of sales and nature of products is crucial to prepare the stock for dealing with the best and worst market scenarios.
Finding the best 3PL partner can help you optimize your inventory by understanding the market requirement. Run a well-managed warehouse with adequate stock and technology-enabled amenities by partnering with a 3PL service provider.