What are Inventory Management Issues?
Inventory management refers to the process by which you track the amount of product you have on your warehouse shelf, in-store, or sitting with other retailers and distributors. This enables you to succeed in having the right number of units in the right place, at the right time, and for the right price. Veteran logistics experts used to refer to the warehouses as a bank and the people working at the warehouses as bankers as they literally handle products that are equal to cash-like value.
Businesses are quickly realizing that inventory control is necessary to run an efficient business and save money in the process. Especially in today’s competitive marketplace, business owners simply cannot afford to have the money go down the drain. Great order fulfillment requires you to have tie-ups with dependable courier services or drop shippers, an up-to-date, synchronized inventory, rapid packing, pickup, and dispatch. If you have multiple and strategic warehouse locations that make it easy to access your customer base, that’s a big plus. However, managing inventory effectively becomes your next challenge to address and requires a few tools to manage it well, Inventory forecasting tools, market analysis and prediction for inventory build-up, and WMS play a major role.
What are the symptoms of inventory management problems?
• High cost of inventory
• Consistent stockouts
• Low rate of inventory turnover
• High amount of obsolete inventory
• High amount of working capital
• High cost of storage
• Lost customers
• Delayed in warehouse TAT.
• Wrong shipments.
Challenges in Inventory Management
- Lack of Inventory knowledge: Being unaware of inventory levels has a largely negative impact on supply chains. Companies should make sure they always have full visibility of their inventory, to know when stock needs to be replenished. It is also important to understand what is in stock, what is going to be ordered, the size and quantity of the order, and what items need to be replenished.
- Inefficient Processes: Even with the availability of technology, many companies still have outdated inventory management systems and manual processes. By upgrading your standard operating procedures and implementing new technology and software, you will become more efficient in managing your inventory.
- Customer Demand: The needs and demands of customers are constantly changing and now they are looking to distributors to be more flexible with their orders.
- Managing People and Space: You should take full advantage of your warehouse space, and this requires precise management of your employees and your space. By mismanaging either of these key areas, you can end up with issues like inadequate storage space, and improperly sorted and stored materials.
The solution: Get automated.
A proactive inventory management system is no longer science fiction. Effective inventory management systems now go beyond the management of merely recording in-stock inventory. They also offer valuable time-saving automation that can streamline business processes. For example, when your stock is reaching low levels, great inventory management software can notify your users and automatically reorder stock from your supplier.
By using a smart inventory management solution, your business is able to access accurate data in real-time. This means your business can make valuable insights for better forecasting. Most importantly, better inventory management systems that use proactive services and alerts can help deter stock-out issues and allow business owners to remain in control of overstock and the supply chain by providing a solid system as a foundation to integrate other services such as their accounting platform.
The Solution –
A warehouse management system or WMS as it is called in the industry can be looked up as a one-stop solution to manage the majority of inventory management issues. WMS is a majorly warehouse automation-related solution providing tool and Inventory management tools like Inventory forecasting, reorder level mapping and alerting, Non-moving analysis, which are modules that help plan inventory better. These features are mostly available with state-of-the-art ERP packages.
Inventory visibility – WMS with the capability to handle barcoded stock, RF ID-based tags, and HHT based operations can give real-time visibility of the material available at the warehouse at any given time. Stock rooms based inventory management also gives better visibility and planning for the planner as many a times Stock at various stages of warehouse activity are mistaken by planners. DOA, RMA, Damaged, Quarantine are some other inventory categories to look at.
Inventory Planning.
The important part of inventory is always forecasting and planning based on needs, Good WMS gives access to Ageing inventory analysis to understand movement pattern and stock levels on hand. ABC analysis based on qty, value are other ways to analyse and plan better to ensure low inventory holding cost.
Space management.
WMS and space management go hand in hand, and it all starts from the best-fit calculators that work real-time suggesting how much an SKU can fit in a pallet and the space required there off. Planners can analyze at the click of a button the space requirement over a period of time. With 3PL companies offering ramp up and ramp down on demand managing space become an easy task. Features like re-warehousing, Storage based on product category and type are few features that a good WMS will offer enabling better space utilization.
– Ashan S