Any small – to mid-size business with growth potential can tell you that efficient and effective inventory management is crucial to success. Inventory that doesn’t turn over quickly takes up valuable space, increases overhead, and may become obsolete over time. That’s why it’s critical to adhere to inventory management best practices.
Check out these six best practices that will better your inventory management.
Stop using manual processes
The most common barrier to accurate inventory management is continued reliance on outdated and archaic manual processes, such as paper spreadsheets for inventory tracking. If your business is still using paper and manual processes for crucial aspects of your business, it may be time to invest in an enterprise resource planning (ERP) system.
An ERP system allows you to centralize your business data across departments, so there’s never a risk of losing important information.
Strive for optimal stock levels at all times & optimize inventory turnover rates
You can think of an optimal stock level as one that maintains just enough materials to keep production lines running at full capacity and enough finished product to satisfy current demand. Following this principle allows your business to keep costs at a minimum, free up cash flow, maximize sales revenue, and deliver products on time, every time.
Track inventory through the supply chain
It’s critical that you know exactly how much inventory you have, when, and where. Even if it’s not in your own warehouse, your business needs to take responsibility for your inventory. Focus on gathering real-time data to accurately track inventory across multiple locations.
Does this seem overwhelming? Maybe it’s time to get all your business’ pertinent information centralized in an easy-to-use ERP system.
Automation is key
Could your business benefit from increased visibility, reduced human error, and an uptick of process efficiency? Of course, it could. One of the best ways to immediately improve in these three business areas is by automating your inventory management processes.
How much time do you waste every quarter with manual processes? You’ll increase efficiency by using electronic data interchange (EDI) to connect to suppliers; and RFID, barcoding, and license plating for warehouse picking and accurate tracking.
Use batch tracking
Consider using an automatic batch tracking system to quickly enter information about products within a batch (or a particular set of goods produced together with the same raw materials). Keeping this information readily available is key in case of a product recall.
Batch tracking is also referred to as lot tracking, and it’s a process for efficiently tracing goods along a distribution chain.
Establish your inventory KPIs
Key performance indicators are crucial to the overall measurement of your business’ productivity and efficiency. By establishing and keeping track of your inventory KPIs, you’ll be able to set goals and improve on them quarter after quarter.