How Can I Eliminate The Risk Of Having Too Much Or Too Little Inventory?
Inventory!!! Here’s my answer in one simple phrase: Track your stock properly!
This may seem like such an obvious thing to do if you are in the Manufacturing industry but funnily enough, there are still tons of companies out there that are not tracking their inventory correctly or with the proper tools. These companies are then left with either too much or too little inventory. How can this affect their business?
If they consistently overstock their warehouse, they risk:
- not selling these overstocked items
- high insurance costs
- a shift in demand for these items
- being caught in a natural disaster
- illiquidity, where too much cash is tied up in their inventory
- inventory becoming obsolete (this typically applies to tech-oriented companies)
On the other hand, if they consistently under stock their warehouse, they risk:
- missed sales
- lost customer loyalty
- a bad reputation, deemed as unreliable and unprofessional
Add on top of these risks, the dangers of using pen and paper (or Excel spreadsheets) to track inventory. What happens if one paper goes missing or an entire Excel spreadsheet gets accidentally deleted or an employee makes a huge error that can affect a big order, causing further processes to get delayed. Another scenario can entail a natural disaster hitting your warehouse; your warehouse gets flooded or catches on fire. What then? All papers are destroyed and you’re left with no data about your inventory levels.
Our business consultants will always recommend to these manufacturing companies to use the proper business tools – a Warehouse Management System (WMS) and a Business Continuity solution. Not only will these tools help businesses properly manage their inventory stock but they can also allow them to efficiently backup all their inventory data, so that no matter if an employee accidentally deletes a large order or if a fire damages the facility, all data will be saved and easily recovered.
In regards to the Warehouse Management System, it’s important to look for a wireless, flexible and affordable real-time system that can easily be integrated with your management system (or ERP suite). By accessing your warehouse’s WI-FI network, your employees can use wireless devices (often referred to as PDTs [Portable Data Terminals], or a barcode reader) that interact with the Warehouse Management System (database). Some of its features include:
- Merchandise tracking (by location, by SKU and lot number)
- Bin location management
- Receiving of stock
- Units/boxes movement
- Physical inventory count
- Employee productivity tracking
- Real-time processing
The sales and management teams at the head office will know exactly what and how much is stocked in the warehouse(s). Everyone will always be well informed with the right data, at their fingertips.
Therefore, rather than tie up too much of your funds in excess inventory or disappointing customers by not having enough inventory to sell, manage your warehouse the right way. Managers must be well equipped to make decisions about their inventory levels that can balance the risks associated with running out of stock with the negative aspects of having too much inventory. Finding that balance, cutting costs, shortening fulfillment lead times and increasing data accuracy and security can all be had with a wireless, real-time Warehouse Management System.
