Some people forget the importance of inventory they think that only assets are important but they are wrong! Inventory is equally important as an asset in fact for some sectors such as retail, manufacturing, healthcare, IT, Media, etc. inventory is even more crucial than an asset that is why inventory tracking is also important!
There are lots of inventory that is kept for future production that is known as spare part inventory. Sometimes by mistake inventory miscalculation also lead to this type of scenario. So, you have to keep spare part inventory tracking also.
Thus, in this blog, we will discuss a few things related to spare parts inventory management.
What Is Inventory Management?
It is a systematic approach to manage, monitor, storing, and selling inventory. Inventory can be a raw material or finished product. There should neither be an excessive amount of stock nor too little, if you are doing this then it is effective Inventory management.
What Are the Important Things to Consider While Doing Spare Part Inventory Management?
Below we have mentioned some crucial points for spare part inventory management:
1. Tag Your Precious Inventory
Inventory can be as costly as assets. Sometimes it is also referred to as stock. Almost all stock has a validity they should be utilized before they are not valid.
You would not want that you found some inventory in your warehouse that has been expired a long time before. This type of incident kills your business silently. But we know warehouses are so big and huge one cannot remember manually.
Therefore, inventory batch tracking shall be done. It means all the inventory belonging to the same category should be packed in a batch and they should be labeled so that one can always find where inventory is stored.
So that anyone can find inventory no matter how big your warehouse it or where you store inventory!
2. Follow Official Work Order Procedure
For the asset maintenance industry, a work order must be used even for small jobs. Through this process, you will know each work order & its history and inventory used in the process.
If employees use inventory parts without keeping proper records then you will not be able to keep track of inventory. In short, inaccuracy will be there in your spare parts inventory management.
Therefore, for effective spare parts, inventory management organizations should emphasize formal work order procedures and no work order shall be done without proper paperwork. Make employees accountable to follow the formal process.
3. Perform Audit Regularly
Specific grouping of inventory can be done to makes sure that inventory is accurate. Inventory can be divided into 3 categories A, B, C in which category A will contain that inventory which is costly.
Category B can contain semi-costly inventory and category C can contain inventory which is not costly. Inventory can be very important to your business or maybe not that depends on the nature of your business.
When you keep auditing your inventory regularly you will know which inventory is expiring soon so you can finish that stock.
4. Keep Inventory Restricted
Inventory is one of the major areas where security is a must. According to the PR News Wire,
“Inventory shrinkage cost retailers $100 billion in 2017 alone, or 1.82% of all sales globally, with $42 billion of that figure tied to losses for U.S. retailers.”
The inventory shall be kept in secured areas so that no miscalculation happens. Inventory security is also important because theft is a big issue. Hence, only a limited people should have access to the inventory warehouse. These people should be reliable and accountable for inventory. For other people, this area should be off-limits.
This will be the first step toward securing your inventory. Because you will use spare parts when you have if someone stoles it or spare part expired then it will not be useful. Moreover, it will be good for the company's bottom line.
5. Invest in Inventory Management Software
Utilizing inventory management software can be an icebreaker for your business. As it provides alert and notifications on different events. You can optimize your inventory better. It has the feature of re-ordering which can be very beneficial as it makes you free from managing inventory manually.
Whenever the inventory goes below the defined level it will alert the inventory team for refilling stock. It will also provide crucial data regarding inventory which can assist you in the business decision process.
Moreover, it can get you an idea about how much inventory you are using! Inventory tracking software can make your process automated and it will reduce the chances of error.
You will be able to manage your inventory more effectively and reduce the expenses of inventory by avoiding the wastage of inventory. Furthermore, with this software in place, there will a perfect balance in your inventory it will neither be overstock nor low stock.
Spare part inventory management is very important as they are the responsibility of the organization. If not utilized effectively, it will only become excess baggage rather than becoming a source of a revenue generator.
For efficient spare part inventory management, all the above-mentioned points can be helpful. Most importantly an organization should invest in an automated inventory or asset management software that can be utilized. It can provide several advantages to an organization
Frequently Asked Questions (FAQs)
1. What is Inventory tracking?
Inventory tracking monitors your inventory such as where it is kept how much quantity is there, what is the status of inventory such as damaged, ready to use, return, etc. These inventories are also tracked with tracking methods such as barcode, QR Code (Quick Response code), RFID (Radio-frequency identification), NFC (Near field communication), etc.
2. What is Inventory shrinkage?
Inventory shrinkage is a term related to inventory management. It suggests the loss of inventory. For example, in your register numbers does not match with a physical calculation that is known as inventory shrinkage. Inventory shrinkage effect business balance sheet.
3. Why spare parts management is important?
Spare parts management is important because, without it, downtime risk is increased, quality of work is not delivered, work can be delayed and it can be expensive because in emergency situations you may not have the time to look for other alternatives.