Bringing inventory control measures into your manufacturing business can help you control your liabilities and provide a safety net for your profit margin. Holding stock can be costly, especially if it’s not likely to sell quickly. Here are seven simple but effective ways that you can reduce your inventory levels.
1. Maintain Accurate Inventory Records
The first thing you should do is to ensure you are maintaining accurate inventory records. If you don’t know what you have, you’ll have no idea what is coming in or out. You should be utilizing your ERP system to keep track of your inventory, as well as orders for suppliers. These records will form the backbone of your inventory control planning.
2. Establish Real-Time Reporting
You want your ERP system to have an inventory tracker, allowing you to monitor things like sales, purchase plans, and product forecasting. Real-time reporting is essential to give you a snapshot of what is happening at the moment. Handwritten notes are likely to become outdated quickly, which can cause incorrect supply order placements.
3. Automate Processes
To make these first two methods more realistic, you want to make your inventory control measures as automated as possible. An automated process will help boost your efficiency levels and reduce manual errors.
4. Stock Classification
Eighty per cent of revenue comes from 20 per cent of your stock. Here is where the ABC stock classification comes in. It promotes inventory control by classifying items into three groups, determined by business value.
A is the most valuable, while C is the least. This inventory control method focuses on prioritising the stock quantity of A items over B and C. To do this, you’ll have to work closely with your key suppliers and closely monitor your trend forecasting.
5. Reduce Supplier Lead Time
Your supplier lead time has a knock-on effect on your inventory control. The pandemic has shown us how fragile lead times can be, as supply chains are vulnerable to fluctuations and travel restrictions.
The key to reducing your supplier lead time is to track your inventory supply and adjust your safety stock. This way, you never risk running out of essential pieces of inventory. Developing faster lead times with your suppliers can give you more flexibility for your inventory control.
6. Eliminate And Avoid Obsolete Inventory
The last thing you want is for there to be obsolete inventory sitting in your stock room. To eliminate the risk of obsolete inventory or deadstock, you’ll need to know where a product is in its life cycle. As items start to decline in popularity, you can bring in sales tactics like promotions to help move the stock. You can also pinpoint when to reduce your reordering of the product.
7. Just-In-Time Scheduling
In an ideal world, your inventory would go in one door and out the other. The just-in-time schedule means that your stock arrives just as it’s due. This inventory stock method focuses on reducing waste by controlling deliveries. Just-in-time scheduling relies on a staple chain with reliable suppliers.