If you’ve been operating a company for any length of time, you’ve probably noticed that your business inventory sometimes runs a little low. When this happens, your suppliers need to get their act together and catch up on their orders before the next production cycle starts. The result? You may find yourself being locked out of additional product until the situation is appropriately resolved and you can resume your supply chain operations. If you run a manufacturing business, especially one that specializes in supply-chain management, then chances are good that your supply chain is not just running smoothly, it’s de facto running itself. It’s imperative that you have efficient ways to manage your inventory so that you can focus on growing your business while still efficiently getting your products to market as quickly as possible. Fortunately, managing your inventory effectively is something that very little in today’s globalized world is beyond your control — at least in theory.
What can go wrong when managing your supply chain?
Many suppliers are inspection- or usage-based and do not keep track of each and every item that arrives at their facilities, and such management skills may be developed during the diploma in logistics and supply chain management. If a supplier does not keep track of the quantity of their products that are delivered to them each day, it’s very difficult for them to keep up with demand. This leads to suppliers being at a loss when demand unexpectedly spikes and they are forced to find a way to get their inventory back up to speed. When you have a fragmented supply chain, this can become a difficult problem to troubleshoot. It’s also not a good sign when you hear that your customer is experiencing longer lead times than normal due to maintenance work on a nearby plant.
How to successfully manage your inventory
One of the best things about managing your inventory effectively is that you get to choose which items make the cut and which ones don’t. The online MBA supply chain management is one of the best ways to develop the project management skills. With that said, there are a few things that you must keep in mind when managing your inventory. First, you must have a clear idea of the quantities needed for your various products and how they are expected to sell. If you don’t know how many units you need for a certain product, how can you guarantee that you will have enough to supply them? Being in the dark about this crucial aspect of your business can wreak havoc down the road. Secondly, you must have processes in place to track and manage your inventory. If you don’t keep track of every item that comes into your facility, how will you be able to determine how much of each type of item is required for your products and how much is left over? You can never be too careful.
The best part of managing your inventory: knowing what’s in stock and how much you’ll need
One of the best perks of managing your inventory effectively is that you get to choose which items make the cut and which ones don’t. This allows you to focus on growing your business while maintaining your efficiency with your product inventory. You may have heard that the most important thing you can do is to check your “inventory accuracy”. This is true in two ways: first, by keeping track of the number of units that you have in stock and the expected sales for each type of unit. Your inventory accuracy is then telling you if you have enough of the items to meet demand. But second, and most importantly, is to have a “stock check”. This is a quick inventory count that you take before each shift. This inventory check should include checking the amount of unsold merchandise sitting at your facility as well as the number of returns and cancellations on every shift. This will allow you to know if there is a problem with your product inventory or the way that you are managing it. There are many PhD in logistics and supply chain management programs, where researchers are working hard for improvements. In some industries, you may even have to have a “time out” on your product inventory. This is a quick inventory count that you take before each shift. This time out should include looking at how much of each type of product is left and how much is expected to be sold each day. This will allow you to know if there is a problem with the demand for your products or the suppliers.
Step away from the calculator and get a pen and paper
Now that you’ve got the numbers straight in your head, it’s time to put them into action. The first thing that you’ll want to do is to take a step back from the calculator and get a pen and paper. This will help you to better understand your business and will help you to focus more on the processes that you need to strengthen in order to successfully manage your inventory. Next, think about the forecasted demand for your products. Will this be the first time that you have to order this product in bulk? If the answer is yes, then you need to think about how your inventory will react to this sudden surge in demand. This is especially true if you sell products that are perishable — i.e. food, medications, etc. It’s common practice to keep a stock of food that is needed as a short-term emergency supply. If you find that you are having to go to this extra effort, it may be that you are over-estimating future sales and should relax the stockpiling process.
Summing up
The best thing about managing your inventory effectively is that you get to choose which items make the cut and which ones don’t. With careful inventory management, you can ensure that you will be able to meet demand while still having enough inventory to supply your customers.
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