Your company’s inventory management practices can contribute to the bottom line and the company’s overall success or detract from them. The choice is yours. Tackling inventory management best practices may not be the most exciting challenge in your business, but it is one that can add a lot of value.
A business that runs out of popular items will find itself on the bottom on a supplier list before long. Customers will tolerate an out of stock notice here or there, but too many of them can lead to disappointment and a customer exodus that, once it starts, is hard to contain.
The secret to customer retention is to minimize out of stock messages. And the secret to maximizing profitability is to avoid over-investing in your inventory. How can you reconcile the two? By solid best practices in manufacturing inventory management. Good best practices satisfy the need to remain lean while still offering customers the timely delivery that they seek.
The Best Practices for Manufacturing Inventory Management
Manufacturers worldwide cite many of these best practices as important for their business. Use one or all of these to improve your inventory management system.
- Use your ERP system reports for projected inventory levels: Demand forecasting reports from your current ERP system can help you project the amount of inventory to keep on hand for the current and following quarter. This enables you to keep enough products on-hand to fill orders.
- Maintain current inventory tracking. Improve the accuracy of your current inventory management system. Barcodes, scanners, and software add-ons for your Sage 100 system enable you to minimize tracking mistakes.
- Scan items into inventory quickly. Make sure that items on the receiving dock are entered into the inventory system and aren’t just stuffed into bins or packed out onto shelves. Teach your staff to scan all items as they move into and out of inventory to ensure that items are tracked accurately.
- Prioritize re-orders: Prioritize orders of new stock around what is selling briskly or seasonal items for upcoming seasons. Focus your time and money on items that are in highest demand.
- Phase out spreadsheets: Spreadsheets are the least desirable inventory management method. They are prone to manual data entry and can be difficult to integrate into ERP systems. Migrate to an inventory management system that works with your Acumatica or Sage ERP for best results.
- Avoid expired products: If you manage items that can spoil such as ingredients, food products, chemicals, pharmaceutical inventory, or other items with a dated shelf life, be sure to use FIFO (first in, first out) inventory methods. Keep careful track of the expiration dates on your items to avoid spoilage.
- Contingency planning: While your goal is to keep inventory levels at the right levels, there are going to be times when demand outstrips supply. Plan for emergencies. Line up extra suppliers now and budget for rush shipping charges, if necessary, to accommodate custom
- Regular physical inventory and audits: Audit your inventory and reconcile records to actual inventory quarterly. The more frequently you audit your inventory, the better you will get at managing it for maximum efficiency. Routine physical inventory, as well as audits, can help you identify shortages and mistakes quickly. The faster you can identify them, the faster they can be fixed.
Excess Inventory Is a Symptom of a Bigger Problem
Excess inventory piling up in the warehouse is just one symptom of a much bigger problem. It’s usually a reflection on a lack of best practices and processes throughout a company. By incorporating these best practices into your warehouse and distribution center, you can make manufacturing inventory best practices part of your operations for improved profitability, order fulfillment, and customer satisfaction.
Emerald TC specializes in helping mid-market, multi-location companies increase efficiency, productivity, and profits. We support Sage and Acumatica ERP products and offer Sage 100, Sage 500, Acumatica Cloud ERP and more to help your business manage supply chain needs, improve productivity, and remain competitive in a global marketplace. Let’s discuss how we can help you. Contact us or call 678-456-6919 today.