In part one of our ERP series, we outlined some common inventory challenges and how to solve them. In this next part, we’re going to take a deep dive into both the people and processes of inventory management.
Managing Inventory processes can be complicated, so it’s not surprising that issues often arise, especially if there’s unpredictable fluctuations in sales. Some of the more common inventory issues are:
When you inevitably run into an inventory problem, the first thing you’ll want to do is perform a risk assessment and make sure you have a backup plan in place. However, there are some actions you can take that will minimize the chances of encountering an inventory issue. They include:
The implementation of an ERP System like Netsuite can save an organization significant amounts of both time and money. It’s no longer necessary to halt warehouse operations for days at a time to perform manual inventory checks. With a barcode inventory system in place, you can easily forecast, and accurately scan individual sections of inventory into your ERP platform.
Understanding the Importance of a Cycle Count Program
Are you familiar with the term cycle count program? If not, you should be. Having a cycle count program organizes your inventory management efforts by creating a schedule to check in on specific products at regular intervals. A count cycle enables you to reconcile small portions of your inventory on a daily basis, instead of trying to count all your stock at once. ABC inventory analysis in conjunction with a count cycle program can help to prioritize which groups of inventory require the most attention.
The ABC process sorts inventory into three buckets:
A. High-value products with a low sales frequency
These products require the most attention because their impact on revenue is significant
B. Moderate-value products with a moderate sales frequency
These products require an average amount of attention because their impact on revenue is moderate, and the turnover rate of the products is faster than high-value products
C. Low-value products with a high sales frequency
These products require the least amount of monitoring because their financial impact is low, and the stock is being turned over quite frequently
Using any type of process-driven inventory management system, especially an ABC process in tandem with a count cycle program, will ensure that the products with the biggest impact on revenue are inventoried most often.
Looking to implement an inventory management system into your organization? Talk to the ERP specialists at Withum. Contact us online with questions, or give us a call at 646-604-4193.
We all know the adage, “a place is only as good as the people in it”. The same goes with your inventory management process! Cultivating supplier relationships is necessary for consistent and reliable success.
Building strong relationships with your suppliers is critical to an organization’s success. It enables you to act quickly in unpredictable economic climates, or when orders are placed or cancelled last minute. Supplier relations are especially important when:
Having a good rapport with all your suppliers increases the chance that they’ll help address any inventory problems that arise, and work with you to meet customer demand.
But, successful supplier relationships aren’t just about being cordial. It involves a steady stream of proactive communication from both parties. Has your marketing team forecasted an increase in sales? Notify your suppliers so they can make accommodations. You can even ask them to alert you on important events as well. Is production behind? Ask your suppliers to warn you, so you can adjust marketing tactics or find a temporary replacement solution.
Supplier relations aren’t the only people that matter in the inventory management process. No organization wants to have to pause operations, especially not for onboarding or training purposes. However, even the best ERP system is useless if no one is trained on the process of how to use it. Use the following three tips to develop a more competent, dependable workforce:
1. Hire Experienced Professionals
Inventory managers are potentially responsible for hundreds of thousands of dollars worth of product(s). To avoid issues with inventory control, hire someone with ample experience and expertise. Even better if they have prior relationships with suppliers in your organization’s industry.
2. Foster a Culture of Accountability
Work with upper management (or if you are upper management, HR) to really flesh out the responsibilities of inventory managers. If they don’t have a good understanding of their role within the organization, they can’t do an adequate job of helping the company meet their strategic goals.
3. Train, Train, and Keep Training
If you’re thinking about, or already invested in an ERP system, take advantage of on-premise training! We can’t stress enough how much regular training sessions really make a difference in the widespread adoption and utilization of new tools and software. Since the ERP system you choose will likely be tailored specifically for your company, on-site instruction is a great chance to get customized training on process best practices.
In our next and last piece in this ERP series, we’ll dig into the technology and data behind inventory management and discuss why an automated ERP platform is by far the best option.
Is an unorganized inventory management process costing you time and money? Discover how an ERP system can help alleviate your inventory challenges. Contact us online with questions, or give us a call at 646-604-4193.