In business management inventory consists of a list of goods and materials held available in stock. Management of an inventory or Inventory management is all about handling functions related to the tracking and management of material. This includes the monitoring of material moved into and out of stockroom locations and reconciling the inventory balances, setting targets, providing replenishment techniques, reporting actual and projected inventory status. The task of ABC analysis, lot tracking, cycle counting support etc. can even be a part of inventory management.
The primary and foremost step in inventory management is acquiring accurate information for inbound operations. The information so gained in advance can be a crucial factor in improving the inbound productivity. Setting up of an advanced inbound strategy and execution framework can be done without too much of re-engineering effort for the supply chain. The perfect way to commence is to make the best use of information available to you and establish a set of rules and regulations to harness the information efficiently.
In order to better your work and progress further you can conduct a survey by asking supply chain executives to name the five most important area for improvement in operations support systems. The outcome of your survey will reflect better inventory planning as one of the target areas. You must pay special heed to establish an effective way to maintain inventory data integrity or setting up higher productivity and capacity utilization. Lack of efficient inventory data integrity can lead to large amount of non-productive labor, underutilized distribution center capacity and diminished customer service levels due to incomplete or late orders.
Retailers, do you know what a power of technology blended with your inventory management system could result in? You may think you know a lot about their uses and how they may fit your needs but you could be way behind on the current technology as well. Let us see how inventory management reports can help you.
An ideal inventory management report consist of information on basic stock list, inventory turnover, product availability, back up stock, forecast, order point and order quantity.
Basic stock list is the list of SKUs (products) along with the description, its stock number, quantity of items on hand and sales of last specified weeks. The weeks may be for 4 weeks or 12 weeks or as per the retailers needs. These basic information about inventory helps to arrive at sales forecasts and order quantities.
Inventory Turnover is the ratio of turnover to inventory. In other words it’s the total amount of SKUs sold at a given time. The main concept behind inventory turnover is to find the return of investment on each product i.e., how much amount can be generated from the amount invested on a SKU. The retailer must plan their turnover to achieve reasonable profits.
Product Availability means the product availability status when the customers’ demand for it. Retailer must maintain minimum amount of inventory as well as not run out of stock. Retailer must have managerial judgment skills in order to preplan product availability.
Backup Stock, commonly known as safety stock, is used when the customer demands exceeds or forecasted demands exceeds or when there is delay in delivery of goods by vendor. It acts as lifesaver during above mentioned situations.
Forecast gives many valuable insights to retailers. Sales forecast are straightforward in nature. There are various forecasting techniques that are used to arrive at accurate forecast value. Based on these forecasted values retailers can optimize the inventory.
From past few years distributors were looking forward for a device that can help them control and manage their largest asset, inventory. As a result several computer software companies have developed comprehensive inventory management modules and systems. These fresh packages enable the distributor to effectively manage his warehouse stock.
Tough the software technique is a beneficial aid yet it cannot provide solutions to inventory management problems. In order for the inventory management system to live upto its potential and perform its best, make sure that you follow quite a few basic and extremely significant ways of good inventory management.
To begin with, ensure that your company is protected against theft. There should be no pilferage problem at your place. While ordering, order only the amount of non-stock or special order items that your customer has approved of. If you wish to add an inventory, you must get a purchase commitment from your customer. Make sure that you assign and use bin sites. Establishment and usage of proper bin sites make order picking a hassle free job in your warehouse. Don’t ever forget to make an entry of the material leaving your warehouse. Try to get rid of the ‘no charge/no paperwork’ material swaps. You should charge the product samples to a salesperson account until they are either returned to stock or charged to the customer.
Effective inventory management also requires paper work (picking documents to be filled by the end of the day, entry of every single stock receipt in computer etc.) that is upto the mark, determination of the most beneficial replenishment strategy for each item in each warehouse, setting up some lucrative offers and awards for the buyers, specifying guidelines for setting the reorder method and setting up of an on-going dead stock and excess inventory control program.
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