7 Solutions to Inventory Management Problems
Four typical inventory problems that we see in many organizations are the following:
- Lack of space in the warehouse
- Too much of the wrong stocks
- Too little of the profitable stocks
- Lack of budget to purchase the stocks that are really needed
Here are 7 Solutions to Effective Inventory Management that can set you on your way to getting better control of your inventory and increase your profits.
7 Steps to Effective Inventory Management
- Create a more accurate forecast – many companies still base their forecasts on just adding 10% or some arbitrary number to last year’s performance. This may work well enough in a situation where you are a small player in a large market and your strategy is to eat into your competitor’s market share. However, if your product is more of a “dependent type of inventory” this approach may not work very well for you.
- Know what is in your warehouse – In the quest to chase sales, Warehouse chores are often relegated to the back burner. You must cycle-count your stocks regularly to reduce variance.
- Determine which of your products actually make money for you – Sales people often focus on selling the products that are easy to sell. Often these are the low margin high volume items. What about the other items? Why don’t they sell? Find out which of your products are the real money makers. Develop a good set of inventory analytics which give a good view of your business performance.
- Prevent Overstocking – Avoid holding large quantities of inventory. Fashion and tastes change very quickly these days. Encourage your staff to keep a close eye on stock movements and try to have only the quantities in the warehouse that are required for your current needs. Keep you safety stocks as low as possible while keeping the risk of going out of stock also low.
- Prevent Going out of stock – Avoid products and suppliers with very long and unpredictable supply chains. Closely track demand for your product and regularly review your re-order points.
- Get rid of your dead stock – one of the hardest things to do is to get rid of dead stock. There are many reasons why this is so and beyond the scope of this article. The important thing to remember is that you may run out of warehouse space sometime in the future. The best thing to do is to prevent accumulating dead stock in the first place.
- Train your staff – the skills to implement the solutions above are learnable and trainable. These are professional skills that are learned best on the job and in through the training programs that we offer.
RMP Consultancy regularly conducts public and in-house training seminars in the areas of supply chain management and operations management including basic warehouse management, inventory management and logistics as well as purchasing and procurement management. Send us an email or give us a call and let us help train your staff.
Upcoming Warehouse, Inventory and Logistics Seminars from RMP Consultancy
We have scheduled these great seminars to help you optimize your operations. Call us now and Book a Slot!
Register for one of the Seminars Above
Register for the Seminar
RMP Consultancy Seminars are available in the following formats:
- Public Seminar at our training center in Quezon City Philippines
- In-House (at your site) Workshop Format for a Max of 25 pax (Recommended)
- Special Exclusive Run
- One-on-one Coaching
Please Call Marco or Claire:
Landlines: Tel (632) 697-0767, Tel (632) 579-0233
Mobile (Globe) 0917-882-5578, Mobile (Smart) 0920-918-7358
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