Businesses today face a daunting challenge with optimizing inventory, with an ever increasing number of SKU’s and an ever changing demand pattern. The ability to maintain and manage optimum inventory levels has become difficult than ever before.
Typically when your business is growing you spend less time thinking about inventory and efficiency in inventory management, and most of the time is spent in ensuring customer service levels. However it’s when the off take is slow or when inventory starts building up, the focus moves to cost and the most glaring cost that comes up is that of unused inventory.
Have you thought what really drives your supply chain and associated inventory?
Lead times variation
Reorder frequency and quantity
Inventory positioning in the supply chain
So how do you deal with each of these variables in an efficient and effective way?
- Supplier Assistance –Solicit the help of suppliers. Using supplier managed inventory and integrated software systems, you can have visibility of supplier stock and there are fewer errors in stock management and data entry.
- Lead Time Tracking – It is equally critical to measure actual lead times, to effectively understand and plan your purchases. Ideally deep and effective tracking of lead times is critical to maintain best inventory levels.
- Fanatical Demand variation tracking – It is very important to have highly efficient and strong controls over the demand variations and understand the smallest changes in customer buying patterns to effectively manage promotions and sales discounts to keep inventory at optimum levels.
- Tracking System – A highly efficient software to manage inventory and monitor turnaround times, allowing business owners to organize item levels and take cycle counts in distribution centers or stock rooms. The biggest challenge is always keep track of real inventory situation at all times and classifying inventory effectively.
There is just one way to manage inventory, which is being fanatical about the way you are handling it. Just like business owners want real time updates about sales figures, there are monthly sales targets and all efforts are made to achieve the sales targets, so also an equally fanatical approach needs to be maintained towards inventory; on how to manage inventory, draw inventory management targets, how to handle the same and never loose sight of the end objective, that you want to be a lean, profitable and top performing organization.