How to Improve Inventory Management
September 21, 2022
From limited resources to labor shortages and lead time fluctuations, organizations worldwide often struggle to meet changing inventory trends and demands—a challenge that isn’t getting any easier as we face ongoing supply chain disruptions and demand changes. Therefore, it’s critical that supply chain management officials regularly analyze and optimize inventory management systems and processes to keep up with market needs.
Inventory management is crucial for countless organizational processes in the supply chain. With it, you can improve product visibility for customers, supply logistics partners with necessary data, and keep up with orders more easily.
Here are some ideas for how to improve inventory management and boost efficiency.
Steps for Improving Inventory Management
1. Invest in Processes and People
Every supply chain organization has a unique set of employees and systems. Your staff and various internal processes determine how efficiently you manage inventory and progress through orders.
Many organizations have used the same management strategies for years without measuring and managing the efficiencies of their processes. While these techniques might have worked in the past, they may now be holding your business back from complete inventory visibility and control.
Inventory management officials should examine current procedures and analyze whether they meet specific inventory KPIs like service levels, out of stocks, and inventory turns. If you observe a decrease in efficiency or failure to meet key goals, it might be time to invest in new procedures.
One way to enhance existing processes is by investing in new technologies. Some tools, like warehouse management systems (WMS) can enhance the management of inventory storage in your manufacturing or warehouse locations. Others, like vendor managed inventory (VMI) software provide a framework to share supply chain information between trading partners. These platforms can transform procurement from upstream suppliers and give you more control over inventory distribution to downstream buyers.
You should also strive to provide employees with high-quality training in all internal processes and each time you invest in new tools or inventory management software. Even the best processes can’t reach their full potential if your staff doesn’t understand how to best utilize them.
2. Take Advantage of Infrastructure and Technology
Once they’ve analyzed existing structures and decided to invest in new ones, supply chain organizations can explore the available technology and infrastructure that support their goals.
Most current supply chain processes and ecosystems have become reliant on digital infrastructure. Implementing digital solutions helps your company adapt to industry trends and scale growth. But if you digitalize other areas of your business and neglect inventory management, your business may end up trying to reconcile disjointed processes. The same can be true if you choose an inventory software provider that isn’t integrated, offers limited solutions, or isn’t keeping up with the latest market changes that impact your business.
Taking advantage of digital transformation technology from a true integration partner is critical for proper inventory management success. Inventory software can streamline manual tasks, freeing team members to focus on higher-priority jobs instead. And digital applications reduce the potential for human error, letting you fulfill orders accurately every time.
In addition to a warehouse management system, organizations should also research appropriate mobile barcoding (RFID) tools. This technology helps save on labor costs and streamlines many processes by:
- Eliminating hand-to-hand paper transfers and typing
- Updating your ERP in real-time
- Providing long-range barcode scanning
- Enabling remote communication between management and the workforce
You can also use integration tools to connect existing applications. Connective technology can improve organizational infrastructure and streamline internal processes. It also means a lot less time spent typing, and retypingâ¦and retyping in inventory details.
3. Explore Supply Chain Data and Industry Insights
Lastly, you should continually check current trends in the supply chain and your organization. Pairing technology and industry analysis can help you achieve a comprehensive inventory management plan. Analyze your organization’s data regularly and compare trends to find new ways to improve efficiency.
With the right people, processes, and technology in place, organizations can begin to review data and use it for business intelligence purposes. In turn, you can improve areas like demand planning, warehouse operation, and fulfillment.
If you don’t analyze your data (or base it only on historical trends), you might develop a false perception of your company’s activity, and misguided beliefs can cause you to make choices that negatively affect the supply chain’s efficiency.
For instance, you might misinterpret an upcoming trend based on last year’s numbers. You could think customers will demand more product and order extra items to bulk up your supply. But if this analysis was incorrect, you would have a surplus in items that also leaves other areas of the supply chain lacking in product.
By keeping up with industry trends and your organization’s activity, you can predict upcoming trends and make more precise decisions.
Improving Inventory Management Helps with Company Success
By establishing reliable inventory management practices, you can enhance visibility across the supply chain. Software can provide real-time updates on key inventory data like:
- Available inventory/stock levels
- Number of units ready for shipping
- Estimated delivery times for retailers or consumers
Higher visibility can prevent delays during inventory shortages or other supply chain challenges. The reduction in delays lets you meet current demands more effectively. Further, inventory tracking can also help you strategize around the need for safety stock, or the amount of inventory you need to be manufacturing to keep up with incoming purchase orders.
Next Steps for Improved Inventory Management
Inventory management is connected to all other areas of manufacturing. Without the right inventory control, you won’t be able to meet customer needs, communicate with suppliers or facilitate product distribution. So, if you haven’t looked into digitally transforming your inventory management strategies already, the best time to do so is right now.
TrueCommerce offers integrated solutions like top-rated EDI and VMI software that can enhance your inventory management procedures by connecting your systems and automating key procurement and fulfillment steps. To get started with TrueCommerce, request a free demo today.
About the Author: Scott Kleinert is a global sales executive with more than 25 years of experience in supply chain strategy development. He is currently responsible for TrueCommerce’s collaborative management service offering with specific expertise in the consumer goods and retail industries. Scott leads the team that initiates and develops the TrueCommerce vendor managed relationships as well as cementing the value associated with these collaborative initiatives. Scott lives in South Carolina, taking advantage of all that coastal living offers.
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