Inventory management is, by nature, a balancing act. You’re looking to always have stock on hand to meet demand, without ever having so much that costs are too high. Walking that kind of tightrope needs care and attention.
That’s why smart businesses have well-planned inventory management systems. Those systems help firms to control their supply chain and keep a good handle on inventory. Even companies with defined inventory management processes, though, can still make improvements.
Below are five steps you can take to streamline your inventory management system. Whichever system you use, these five ideas could save you time, hassle, and money.
Leverage Smart Tech
As with all business areas, you have lots of tech options to aid inventory management. The age of manual stock checks and pen and paper records is long gone. If you’re not using inventory management software, you’re behind the curve, and that’s the tip of the iceberg.
Many firms now use barcode technology to help automate inventory management. Scanning goods into and out of your warehouse gives you quick and accurate records of stock. Such automation of the supply chain will increase operational efficiency across the board.
The biggest companies, too, are now starting to leverage AI technology. Retail giants like Amazon already deploy machine learning and other AI processes. They help them to manage inventory and automate elements of their warehousing intelligently.
Full adoption of AI for inventory management may be beyond your budget right now. It’s likely to be the future of the field, however, so it’s worth thinking about.
Collect & Utilize Real-Time Data
Collecting and using the wealth of data at your fingertips is a useful tactic in many areas of business. It can prove vital in streamlining your inventory management. Across the supply chain, you’ll generate a whole host of data. If you collect and analyze data in real-time, you can make better-educated decisions.
Having timely, accurate data allows you to draw informed conclusions. Those may be that you can tighten up elements of your processes for greater efficiency. Real-time data, too, will enable you to pick up on patterns or trends quicker than your rivals.
Such analysis of data is another area where you can use AI to streamline processes still further. AI-powered deep or machine learning can make light work of vast quantities of data. Pattern recognition in data via these methods is now used in a wide range of industries.
Sharpen Up Demand Forecasting
It can sometimes feel like you need to be able to tell the future to manage your inventory effectively. While no one expects a business owner to be Nostradamus, effective forecasting is a crucial part of your job. The most streamlined inventory management is that which predicts changes in consumer demand.
You need to account for as many different factors as you can when forecasting demand. You can use everything from past sales figures to weather patterns to predict the needs of your customers. The best way to improve your forecasting is by capturing data related to as many factors as possible.
Try to consider everything that will impact the demand for your products. Then, collect data relating to those different impacts. You’ll then be able to use that data as part of a model to forecast demand. Keep checking the accuracy of your forecast, and you can create a more efficient model over time.
Optimize Warehouse Layout
There are often hidden drags on the efficiency of your supply chain. Even if you’ve taken care over your inventory management system, there can be issues that you miss.
One typical example is the layout of your warehouse. Is the way that stock is stored and moved impacting your overall efficiency? You might be surprised at how often the answer’s yes. Optimizing your warehouse layout is a straightforward way to streamline inventory management.
Start by checking that you’re making the most of the space available. Are there gaps or empty areas in your warehouse? If so, could you rearrange shelves or move items to make better use of those spaces?
After this, you can start thinking of the order in which you store items in your storage areas. If you have lines that sell in far higher volumes than others, could you keep those closest to your loading bay? It may not seem like a significant change, but over time you’ll see the difference.
Foster Closer Ties With Suppliers
Inventory management isn’t an entirely enclosed process. You won’t have complete control over every stage of the supply chain. At one point or another, you’re going to be reliant on suppliers. That’s either suppliers of the products you sell or of the components you use to make them.
Fostering closer ties with your suppliers can, therefore, help you streamline inventory management. By building greater trust with suppliers, you can better rely on the service they offer. What’s more, you’ll have more options if things go wrong.
If you need an emergency delivery, a supplier with which you have a close relationship is more likely to help. Having secure connections with more than one supplier is helpful too. When one can’t give you what you need, you’ll always have somewhere else to turn.
Reduce Costs & Increase Productivity by Streamlining Inventory Management
Streamlining your inventory management system can deliver exceptional results for any firm. By following some or all of the tips above, you can get your supply chain in tip-top shape. That will help you to reduce costs and boost productivity at the same time. You’ll be able to meet your customer demands without compromising your bottom line.