Inventory control is one of the primary concerns for wholesale distribution businesses. When done right, inventory control can not only provide details of the current stockpile, the location and material movement but also lower costs and risks. This makes inventory management a reliable source for financial reporting. The most practical use of an inventory control is the optimal maintenance of stocks. While a shortage of stocks can result in loss of sales, a surplus of stocks translates to unnecessary usage of space. Surplus stock also leaves business vulnerable to incurring financial losses from damage and expiry.
There are various techniques for effective inventory control, however, many companies often struggle with process. Inadequate inventory control often leads to certain business challenges. Two major challenges are:Inaccurate forecasting:
Forecasting can have major consequences. A majority of business outcomes rely on accurate forecasting. Inefficient inventory control results in errors, that in turn cause backorders, lost sales opportunities, and dissatisfied customers.Lack of visibility:
When business units lack transparency, it leads to incorrect shipping and reorders. Regulatory standards may insist on inventory mandates to minimise risks and ensure a baseline of processes.
While there is no one-size-fits-all solution, there are a few methods to make sure you have an adequate inventory control. The following 5 steps will allow you to control your inventory with ease:1. Categorising your inventory:
Categorisation has widely proven to be an effective method in maintaining proper inventory control. In this approach, the stock is categorised into the following categories:Fastest moving products:
These are the products that have a rapid processing speed and are best placed closest the shipping, staging, and receiving areas.Fast moving products:
While they have a rapid processing speed, these products are slower than the products in the category above.Slow moving products:
These are have moderately fast processing.Slowest moving products:
These are the products that have the least processing speed and are located away from the shipping and receiving area than all of the above categories.Excess or obsolete stock storage:
These products are the non-moving assets and are farthest from the shipping end.
With the decrease in demand, each product can be moved accordingly to accommodate the fastest moving products and optimise the process.2. Automated Demand Forecasting:
Market trends, seasonal demand, and economic health are only a few of the external factors that affect the performance of a business. Such variability promises to make forecasting a difficult job. However, most of the guesswork can be eliminated by implementing automated demand forecasting. Automation utilises historical data to generate a dynamic forecast on asset movement. This optimises minimum and maximum order quantities.3. Automated Replenishment:
Replenishment automation leverages a centralised inventory management to help better tracking of your inventory status. The automation also prevents over stocking and under stocking by overriding replenishment parameters based on stocking policies and targets.4. Continuous Process Improvement:
This is an important step as lack of continuous monitoring of operational challenges can result in an error repetition.5. Inventory Optimisation Technology:
Out-dated technology such as ERP and WMS do not support optimisation of inventory levels. In order to get past the competition, you need to implement add-on systems that support leaner operation process and improve service levels with reduced costs.Get the Amazon edge
Failure to comply with regulatory standard can affect the legal compliance of a business which can incur severe penalties. Regulatory compliance failure can adversely affect business reputation and result in loss of government contracts.
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