Every company wants to grow, and with growth comes the need to assess and reassess core foundations. The following basic inventory management tools slot into 4 categories.
1. Systems and Organisation
Systems are the key to growth. Whether your organisation needs it today or you are looking to grow in the near future, developing systems to support robust inventory management is essential.
Choosing the right space when stock first arrives is the first step to a streamlined inventory management system. Pallet racking, for instance is one way of maximising warehouse capacity, with varying degrees of sophisticated racking and stacking equipment available, should growth demand it.
As an easy starting point, mark out on the floor the direction in which inventory, once receipted, will flow. For example, purchase some bright masking tape and fix lengths to the floor, ensuring each stage of a product’s journey (inwards area, un-packaging spaces, manufacturing benches, etc.) in the warehouse is organised. From a health and safety perspective, it will allow for a much better work environment in the long run, including reducing wasted resources on re-organisation and damaged goods opportunities.
Eliminating tardiness in your operations and managing similar aspects such as efficiency across your supply network is another important principle to implement. The care, in which your company takes in recording and storing finished goods, is a barometer of the overall health of your company, as it has a flow-on effect in terms of: shrinkage, waste reduction (aim for a ‘Lean’ work environment), and the cost of extra warehousing.
Unseen obsolescence costs and unnecessary additional expenses, such as write-downs have often led to an untimely end for many businesses. It is imperative; therefore, to keep accurate records of all inwards and outwards receipts, for instance, if good inventory tracking is to be achieved.
2. Documentation
Stock loss or what is typically known as ‘shrinkage’ has been a major contributor to some ‘once great’ companies failing.
Keeping a reign on this is imperative, and therefore, eliminating documentation errors throughout your inventory management system is key.
There are a number of ways shrinkage can happen; through physical theft, cyber and IT failure, receipting the wrong item or receipting too many of a cheaper line, receipting too little of a more expensive SKU, or entering incorrect buy, or cost prices when receipted, for instance.
Keeping track of the right barcode is critical in keeping stock errors to a minimum. Internal misadjustments, such as errors recorded during stocktakes, highlight the need for the adoption of technology in this area.
3. Planning
Be organised and document everything. When establishing early stage systems and processes, care should be taken in regards to how the following stock-keeping unit details are noted in your inventory management software:
- correct catalogue numbers
- bar code details
- source of origin
- associated spare part data
- shipping and physical storage location details
Sophisticated software is not necessary at this stage; however, smart early stage companies visualize expansion and implement technology to cater for this.
Good inventory management involves considering the long term effects of stock housing and organisation. A simple diagram of what goes where in a store room will help with this: Visualising and thinking ahead can prove very beneficial to future growth strategies. Managing workflow from the outset, therefore, is paramount to successful inventory management.
4. Communication
Recent software developments have meant that smaller companies are now able to disseminate information more easily to those closest to them and make adjustments to head off disruptions. Timely reports are effective in projecting improvement milestones and gauging efficiency as it pertains to inventory management.
