Inventory management can be a tedious process that slows down your business. A software tool with the right features can help.
“A place for everything and everything in its place,” goes the saying. Let’s add to that a label for everything and the means to track it all. And, how about some alerts when there’s too much of one item and a shortage of another? This mix pretty much sums up what inventory management software can do for your business. Whether you’re running a brick and mortar store, an eCommerce site, a supermarket, or a logistics company, an inventory management system is a must-have. It will give you insights into every aspect of your products, and in some cases, will help you better understand your customers too.
Holding excess inventory may seem a logical solution to today’s fast-paced fulfilment environment. Customers are placing smaller orders and wanting them within a day (or less). Meeting these demands without having to over-stock requires a constant balancing act: lower inventory costs, guarantee delivery capability and maintain high levels of customer service.
In this article, we’ll look at why you need a fully featured inventory management solution for your business and the important features you need to look for.
Inventory in transit: Unfortunately, companies have implemented technologies to maximize the opportunity for safety stock (i.e., “buffer” inventory) and they repeatedly invest in the solutions needed to minimize safety stock. The biggest opportunity for most companies lies in the management of inventory, and the important opportunity that’s still out there is cycle stock (or the portion of inventory available to meet normal demand during any given period).
The growing complexities of forecasting and scheduling: When you use cycle stock strategies to group products together and align production schedules, you can start to benefit from more tactical supply chain planning. However, those companies haven’t connected distribution requirement planning, finite scheduling, and the implementation of transportation against their tactical plans.
Too much emphasis on safety stock: Looking specifically at forecast errors, the blog says companies must take the form and function of their inventories (i.e., raw materials, semi-finished goods, finished goods) into consideration. Figure out exactly where that inventory should be held in the global supply chain, and then make conscious choices about it.
Leaders who don’t understand inventory management and processes: The biggest issue is that management doesn’t understand inventory. Some of them view inventory as a big “slop bucket” that they can put their hands into and they can pull out cost savings for the quarter. The problem is that it doesn’t work that way.
Poor inventory choices: Calling inventory the “most important buffer” in the supply chain, managers need to ask whether holding stock is a good or a bad thing in today’s dynamic business environment. In most cases the answer is “a good thing,” but it must be the right inventory.
§ Fold demand management and inventory optimization into the mix: For customers to be happy, inventory has to be in the right place at the right time. Carry too much of any SKU(Stock keeping unit) in the wrong place and you could wind up losing money and negatively impacting customer service. To achieve this balance, shippers can use traditional inventory management tools plus demand management and inventory optimization solutions. Together, these three pack a powerful wallop that shippers can use to address their inventory management challenges. “When you can get your demand management right,” says Banker, “you know to have your inventory in the right place and at the right times.”
§ Start thinking about artificial intelligence (AI) and machine learning: AI (computer systems that can perform tasks that normally require human intelligence) and machine learning (AI that gives systems the ability to automatically learn and improve from experience without being explicitly programmed) applied to demand management solutions—a trend that could help improve forecasting for select time periods. For example, if a warehouse or DC operation lacks the necessary level of SKUs for every supplier, these advanced options could help make more intelligent stock allocation decisions.