The rise of ecommerce coupled with massive shifts in the global value chain have major implications for how companies operate. One of these transformations is the transition from a traditional brick-and-mortar Inventory management system to digital solutions. In the midst of today’s fast paced market, a well-chosen and executed inventory control system eliminates data inaccuracies and process inefficiencies, strengthening operational control and reducing the risk of stockouts or overstock scenarios.
In the past, companies improved their connection to Supply chains by focusing on the company’s current capabilities, boosting operational efficiency, and competing to cut prices. However, this is changing into an adapting networks that evolves to meet changing client demand. Inventory tracking supports this network by enabling stakeholder visibility at every stage allowing for more convenient, adaptive, and transparent fulfillment to become a source of competitive advantage.
As businesses increasingly rely on data to improve client experiences, industry 4.0 tools like digital platforms, cameras, and Internet of Things (IoT) sensors become necessary to building successful enterprise processes for the collection, integration, and evaluation of data from across the workplace. Inventory control solutions are vital for building reliable data sources and businesses that fail to implement them not only continue to struggle with waste caused by faulty processes, but also risk being excluded from the benefits of a connected value chain.
What Are Inventory Control Solutions?
Inventory management includes a variety of functions related to the control and monitoring process of stocked goods. A robust inventory control solution keeps track of inventory levels, orders, sales procedures, and deliveries. These systems are used by businesses to avoid waste caused by misplaced inventory, product overstocking, or fiscal step oversights. Midzise business inventory systems will vary from small businesses as warehouse management and tracking may be required across multiple locations.
Furthermore, inventory management software solutions should not be isolation as it can directly impact sales and total profitability. These solutions may also offer systems to automatically generate and validate production-related paperwork like bills of materials and work orders. As a result, it’s frequently combined or linked with other critical company activities like accounting, shipping, ERP, and CRM.
Examples of Inventory Management Problems
The challenges of inventory management are likely familiar to any business that must manage stocked goods. Understanding these challenges further highlights the added value inventory control solutions bring to a business.
Inconsistent Inventory Tracking
Manual inventory tracking techniques across various software and spreadsheets are time-consuming, redundant, and prone to errors. Employee inefficiency in locating specific inventory items, and emergency orders or unfulfilled sales opportunities all may lead to inaccurate inventory counts. These scenarios reduce an organization’s efficiency in ordering or fulfilling customer sales, allowing for waste, potential shrinkage, and increased operating costs.
Warehouse inventory management controls are labor-intensive and involves several phases such as receiving and put away, picking, packaging, and shipping. Errors can easily occur at each of these stages which may result in costly ramifications.
Managing inventory with paperwork and manual methods is inconvenient and risky. These methods also do not offer reliably scaling across multiple warehouses where inventory sizes grow continually.
Beyond meeting requirements for order fulfillment, companies need to know exactly how much inventory they have at any one time. When stock is counted manually, it can easily lead to misplaced or lost inventory, which may result in faulty forecasting or potential failure to meet demand.
Stock Management Errors
Specialized care and storage plans are required for perishable and delicate material. High-value inventory, on the other hand, necessitates special loss-prevention techniques and inventory management.
Shifting Customer Demand
Customer demand is always changing. Keeping too much inventory will result in outmoded inventory that you won’t be able to sell, while keeping too little will result in inventory that you won’t be able to sell.
Complexity of Supply Chain Management
Global supply networks change on a regular basis, putting a strain on inventory planning and management. Manufacturers and wholesale distributors who determine when, where, and how your merchandise ships need to be flexible and provide unpredictably long lead periods.
Warehouse Space Management
Managing a warehouse space effectively is a daunting task. This can entail maximizing warehouse space for inventory storage, making inventory easy to find for employees, providing enough staffing, quickly fulfilling orders, and coordinating communication with suppliers and transportation firms to ensure materials arrive on schedule and orders ship on time. Inventory management tools can help you plan and build warehouse areas to better control the timing of new product deliveries.
Benefits of Inventory Control Solutions
Improved Efficiency and Data Accuracy
While human operators continue to be a necessity in warehouse environments, replacing error-prone human data entry processes with barcode scanning based inventory control solutions offers precise and efficient inventory tracking, ensuring accuracy of inventory counts.
Inventory Visibility and Robust Data Management
Inventory control solutions offer tools that track, categorize, and manage materials, parts, and product inventories. In-app reporting tools enable users to access, manage, and analyze critical data with dashboards that display the most relevant decision-support indicators.
Demand Forecasting and Streamlined Orders
Organizations can match demand and order management requirements based on accurate inventory usage, counts, low stock warnings, and real-time data analysis all of which serve to eliminate stockouts and lower the risk of inventory write-downs or write-offs.
Improved Operational Efficiency with Integrated Systems
Inventory control software can be optimized to interact with operational and enterprise business systems to automatically update project management, accounting, and other essential applications allows you to make informed, real-time decisions. This enables businesses to track trends, manage security, improve data quality, all while improving warehouse organization, increasing productivity, and lowering operational costs.
Effective Inventory Management Techniques
It is important to set a base level for each products in order to maintain an accurate inventory count. This value assists in determining the number of products available on-site while setting clear parameters for warning indicator once stock falls below a set level. Base levels will differ from one product to the next, given that fast-selling things will have higher values while slow-selling items will be lower. Over time, statistics on the pace of product sales help define a basic level for each products. However, this is only possible if each item is tracked automatically.
ABC Prioritization inventory management strategy can be used if you offer products that fall into several categories. This distinguishes bills of materials for products depending on the level of required attention. High-value items that take a long time to sell would be marked separately from products with a moderate value and moderate sales order frequency, both of which are separated from low-cost items that sell quickly. This allows the business to set unique inventory review process for each category and plan accordingly.
First-In-First-Out (FIFO) & Last-In-First-Out (LIFO)
FIFO dictates that the oldest items be shipped first because older products are more likely to go out of date than fresh stock. This is most obvious for perishable, but if old boxes remain on the back shelves, they become an expensive burden. LIFO means that the most recent products are sold first and the oldest products last. This method is effective for products with greater production cost as they receive reduced sales tax in several countries. The LIFO approach helps lower the amount of sales tax paid based on the quantity of products sold.
The JIT model is an excellent method for managing supplier orders when stored products are going to run out. It lowers inventory expenses and allows businesses to obtain products as needed. Consequently, companies do not need to order a large amount of inventory to store in their warehouses. They can also deal with dead goods that have not been sold or consumed by customers by switching to the JIT model.
Implement Inventory Control Solutions with Stefanain
Developing Smart Manufacturing capabilities requires a careful examination of the existing components and features that make a production line successful.
Stefanini is ready to bring the latest and best digital tools needed to optimize your operation.
Our team of experts will examine your processes and use their knowledge to find the technology that meets the unique concerns of any production line. Ready to get started? Contact us today to speak with an expert!