Inventory management might seem a simple job but it is not! On the contrary managing inventory is a hectic and complex job especially when business is growing. As we know, inventory management for manufacturers is very significant for their business.
What Is Inventory Management?
Inventory management is the process of managing inventory efficiently. It includes an orderly fashion of monitoring, managing, storing, and selling inventory. Stock can be a crude material or, MRO goods, or completed item.
There should not be an inordinate measure of stock nor excessively little, if you can do this, it is effective inventory management.
For effective inventory management, real-time tracking is very important.
According to Statista, “In 2019, 32 percent of grocers in the United States stated that they had a strong interest in real-time reporting technology. Fourteen percent stated they had a strong interest in autonomous delivery vehicles.”
Also Read: Ultimate Guide to Inventory Management for the Retail Business
What Are the Important Tips for Inventory Management for Manufacturers?
Below we have mentioned few important tips for inventory management for manufacturers:
1. Analyze Demand Forecasting
To save unnecessary wastage of inventory, inventory management software can be very useful.
This software gives you a better understanding of the market with detailed reports of sales history such as:
- Tracking market trends
- The high peak of the selling
- The low peak of the selling
- Best-selling product
You can use data to grow sales and avoid overstock or out of stock issues. The software comes in handy especially when you have overstock or out of stock issues. This software alerts you when your inventory is about to end.
This software allows you to set inventory level and when inventory goes below that level then it alerts the responsible employee(s).
After that, the stock refilling process starts and as a result, the organization avoids understock issues or you can bring stock from some other warehouse location so that inventory is available all the time.
Similarly, when you order stock too much then also it alerts you. After which either you can return the stock or send it to some other location of the warehouse.
This software keeps information centralizes so that information is shared with the required person. In simple words, it keeps everyone on the same page.
2. Conduct Inventory Audit
Reviewing inventory is essential for business efficiency. When you conduct an audit routinely, chances are you can find the potential problem before they occur. Inventory management software assists in providing the actual number of inventories. For conducting an inventory audit there are few options.
- Physical Count
A physical count is done for verifying the physical existence of inventory. Since is a long, hectic, and time-consuming procedure, that is why it is conducted at the end of the financial year so that tax can be calculated accurately.
Furthermore, it is more hectic for big size organizations. A physical count is considered a non-effective method compare to other methods because if you find any issue then you have to look at all records of the last year.
Also Read: A Variety of Inventory Management Methods to Enhance Business
- Spot Checking
If issues are found regularly at the year-end audit then you can use the spot-checking method throughout the year. It helps compare the actual numbers of inventory to how much it is supposed to be in numbers. You can conduct this audit anytime as per your convenience.
- Cycle Counting
In this method, a little subset of stock in a particular location is counted on a specific day. The cycle checking technique is a mainstream answer for stock management that empowers organizations to count inventory inside the warehouse, without counting the whole stock inventory.
3. Better Vendor Management
Managers need to maintain a good relationship for better control over inventory. When the process is simple things are sorted between a vendor and organization then it is good for business. Win-win for both, right?
Adjustment and negotiation can be done better. For example, a manager can negotiate better for fulfilling inventory requirements in minimum time or adjusting minimum order quantity. Keep the vendor informed so that he can manage inventory orders efficiently. Therefore, sharing information is important for business success.
With the inventory tracking software, you can get all the inventory information. These types of information are very important for the business. This software provides crucial information such as when a product is expiring or which product is more popular among your customer or product in the current trend.
This software keeps track of orders where it has reached and all the members have full visibility of orders. It keeps the order tracked by their shipment status with real-time information.
It makes the process automated as nobody wants to do complex data entry or calculations with a purchase order. On the inventory box asset tracking barcode or RFID is used for effective tracking. In short, this software saves your time and less prone to error.
Reports are helpful in data analysis and finding the scope of improvement from where sales can grow. Reports are very effective in formulating the business decision-making process. The report can be very helpful in inventory management for manufacturers.
If an organization has a business based on inventory then inventory management software is a must. This software has something for everyone from top-level management to low-level management.
With this software in place, there will be no wastage of inventory. Moreover, the audit will be a simple process. Furthermore, the spreadsheet will be eliminated. Before you invest in asset management software or inventory management software it is important to understand the organization's needs. Then you will be able to figure out the best inventory management software.
Also Read: 5 Things to Consider When Doing Spare Parts Inventory Management
Frequently Asked Questions (FAQs)
1. What are the best inventory management tips?
Some best inventory management tips are
1. Inventory prioritization
2. Practice 80/20 inventory rule
3. Keep track of sales
4. Use the ABC analysis method
5. Set reorder level
2. What is the 80/20 inventory rule?
80/20 inventory rule is also known as the Pareto rule. It means with 20 percent company's input outcome can be 80 percent. In business, it is important to identify what is the most productive work to give input.
3. What are the benefits of inventory management software?
Below we have mentioned few benefits of inventory management software:
1. Alerts when the stock goes below a defined level
2. Real-time Inventory tracking
3. Quick & effective audits
4. Cloud-based technology
5. Spreadsheet elimination
6. Detailed reports