6 Tips For Effective Inventory Management
Without an effective strategy, inventory management can be a major problem in any industry. It can tie up capitol, cause sales opportunities to be missed due to out-of-stock products and create errors in the warehouse. All of these problems are avoidable if retailers have the adequate skills to develop an inventory plan that works. Here are six tips to mastering inventory in a way that is an asset to your company:
1. Make and execute a plan of operation.
Inventory management is a continuous process that isn't handled just at the operations level but should also involve the catalog, marketing, ecommerce and merchandising departments. When the inventory is managed from a main promotional calendar everything falls into place. The purchasing people know how much product is needed, the fulfillment provider is in sink and knows when to have additional warehouse space available, and the contact center can even anticipate when call volume should increase. By using previous years' sales this will also help your company be more prepared for seasonal increases and demands.
2. Always use multiple vendors.
This also means vendor management. If you have some popular items in your inventory and they are hard to keep in stock it is important to have another vendor so you don't have a problem having enough for a planned promotion or sales project. Preventing out-of-stock issues and long lead times can be the difference between a successful season and a failure. If much needed inventory doesn't arrive from a primary vendor it can cause all kinds of problems and the best resort is to have back up vendors available and in place.
3. Have constant and consistent communication.
It is all important to have a good relationship with your vendors. In the eyes of the customer your fulfillment provider might as well be your company. This means a constant and consistent communication with all vendors to make it all work. And trust and flexibility is also important.
4. Set up ongoing compliance policies.
It is important for day-to-day warehouse operations to have standard operating procedures. If you have a product that is packaged a certain way then the warehouse had better know this and have it stored accordingly. Develop operation policies for fulfillment staff, vendors, and merchandisers all to carry out with efficiency and accuracy as the ultimate outcome. This includes the way in which your products are received, stocked, and shipped. Product specification sheets and billing guidelines are also important aspects of a well run operation.
5. Use the right software.
To eliminate data entry errors you will want to implement the electronic data interchange (EDI) and bar code scanning systems. Best selling items should be counted and kept track of most and choose a few items daily to compare actual count and inventory records so there are no surprises.
If you are using Lotus 123 or Microsoft Excel you may want to re-think your software. Instead you might want to use software such as Peachtree or Quickbooks. These are better known as accounting packages because they not only give you a central data base but also provide a dollar value on your inventory.
6. Have a back up plan.
What happens if there is a robbery or damage to your system? You might consider the worst case scenario which could be theft or fire. It could be just as simple as having all critical data saved to a removable thumb drive. Make it a habit to back up that data and take it with you. Such software as Symantec Backup Exec and Norton Ghost can be of help also. Sending an inventory data copy to your accountant monthly isn't a bad idea either.