How to Improve Inventory Management in Your Operation
Inventory management capabilities have become a sore issue for many supply chain and manufacturing businesses. With the use of homegrown or legacy inventory management software or paper-based processes many critical inventory management functionality pieces are missing. In a report published by the Aberdeen Group entitled “What Has Changed in Wholesale Distribution: 2015 and Beyond” supply chain businesses reported that updated inventory management practices can provide up to 95.4% outbound order accuracy and on-time delivery along with other significant benefits. The implementation of integrated data networks helped these supply chain and distribution businesses to improve data availability and increased supplier collaboration.
Some of the top supply chain management functions that are necessary to improve inventory management in your supply chain facility include:
The utilization of real time analytics for the purpose of developing an all-encompassing inventory control plan. Integrating your supply chain management software can provide a constant stream of data throughout your organization detailing what inventory is currently in your facility, future billing for those items, carrying costs of existing inventory and much more. Having access to this data in real time allows your team to benchmark internal KPIs against industry standards to improve overall inventory management effectiveness.
Incoming inventory monitoring. Do not take your suppliers word for the actual quantity delivered. Do not cut corners to save labor hours – use your inventory management software in unison with data collection tools such as RFID tags, barcode scanners, mobile computers and voice-directed technology to check incoming inventory for inaccuracies.
Multiple methods of communication are available. Utilize the aforementioned tools such as WMS and automated data collection to increase data availability within your facility and implement ASN and EDI usage to communicate with your suppliers and customers effectively as well.
Audit trail data archiving. As activity occurs throughout your facility, each movement should be recorded within your inventory management solution. Having this data to access at a later date, if needed, can assist in product recall, investigating theft, quality assurance and more.
Re-evaluate your operations regularly. Complacency is a killer and can prevent your warehouse, distribution center or manufacturing facility from pursuing other improvement initiatives that may be available for your business. To learn more about how to improve inventory management with supply chain technology contact Datex experts today at www.datexcorp.com or 800.933.2839.
How to Improve Inventory Management in Your Operation
BY: ANGELA CARVER
Why Is Inventory Management Critical?
In a study conducted by the Aberdeen Group entitled “What Has Changed in
Wholesale Distribution: 2015 & Beyond” supply chain businesses reported
that updated inventory management practices provide benefits such as:
• 95.4% of outbound orders delivered to customers complete and on-time
• 0.5% decrease in per unit cost in 2014
• 7.5% decrease in out-of-stock occurrences
Integrated data networks made supply chain businesses:
• 1.7 times more likely to find and access data needed for decision making
• 1.34 times more likely to have online visibility into shipment status
• 1.67 times more likely to have logistics collaboration with suppliers
Utilize Real-Time Analytics
Integrated supply chain management software can provide your operation
with business analytics in many forms. This data can provide your business
with a real-time view of what inventory is on hand, the future billing instances
for those items, the cost to carry that inventory, the efficiency of your staff and
much more vital information.
These analytics will help your team to establish a more holistic inventory
control plan. This will provide your staff with the ability to optimize your supply
chain network, potentially reducing overall costs.
Focus on Industry Best Practices
Using real-time analytics, analyze current business processes and capabilities
and compare those to recorded, measurable industry best practices. This will
help your business to identify operational gaps, areas of improvement and areas
where you perform at industry standard levels.
Once you identify these gaps as well as areas needing improvement, your team
can make adjustments to operational processes as needed to better meet
industry best practices.
Areas that should be evaluated include:
• Order putaway
• Order picking
• Order packing/cartonization
• Shipping/rate shopping
• Data sharing/communication
• Technology usage
Monitor Accuracy of Inventory
Many supply chain and manufacturing businesses not utilizing inventory
management software make the mistake of trusting the work of suppliers
when receiving new product. To save the labor hours required to check all
incoming shipments, many forego the verification process and presume that
the correct quantity was received.
Not closely monitoring orders received from suppliers can leave your inventory
counts off. This can increase out-of-stock instances and manufacturing
Utilizing inventory management tools such as warehouse management
software, inventory tracking software or inventory management software and
automated data collection tools can reduce these types of inventory
Consider Integrating Data Capture Tools
The ability of your team to effectively manage inventory is based on the
stability, accuracy and availability of inventory data. This data foundation
can be strengthened with the integration of data capture tools into your
warehouse management system (WMS) to create a constant flow of data
throughout your organization.
By eliminating manual processes, you can opt for automated data
collection. This will help your team to make educated business decisions.
Some data capture tools available include:
• RFID tags/portals
• Barcode scanners
• Mobile computers
• Voice-directed technology
Open Lines of Communication
In many supply chain businesses, operations suffer due to lack of
communication with suppliers, customers and internal team members.
By utilizing supply chain technology such as WMS solutions and automated
data collection, a constant flow of data will be accessible by all team
members and customers. This seamless flow of real time information can
help to increase communication effectiveness.
Other technology options such as electronic data interchange (EDI) and
advance shipping notifications (ASNs) help to increase ease of
communication between all parties.
Implementing these types of technology to increase communication
effectiveness can also lead to improved supplier relationships and increased
Archive Audit Trail Data
As data is collected using warehouse management software and automated
data collection tools the activity data should be stored. This activity should
create a detailed audit trail, showing all inventory handling, movements, etc.
Having this detailed audit trail data accessible will prove useful in instances of
product recall, theft concerns, quality assurance monitoring and much more.
Monitor Inventory Flow Through
Employing the real-time analytics collected using your ADC network can help
your supply chain business to develop inventory flow projections. Using
reporting functionality allows your team to view historical data on outbound
orders and can help to predict required seasonal inventory levels.
Monitoring these seasonal trends helps your business to more accurately
estimate needed inventory and can help to reduce excess on-hand inventory,
associated carrying costs and out-of-stock instances. This will help your
business to avoid order fulfillment disasters that could potentially damage
Re-Evaluate Operations Regularly
Do not let your operation become complacent with benefits seen from
improvement initiatives. It is important to regularly evaluate your operations.
Check your operational processes carefully and benchmark against industry
standards. Focus on the continuous improvement of your operation.
Use of effective inventory management practices and real time information
visibility can help to provide numerous benefits for your business including:
• Reduction in out-of-stock instances and manufacturing component
• Improvement in the quality of decision-making for your business
• Enhanced communication effectiveness across your business and supply
• Reduction in inventory carrying costs
• Greater responsiveness and accuracy when dealing with product recalls
• Reduction in inventory theft
• Enhanced customer satisfaction rates