Implementing Effective Inventory Management
Effective Inventory Management is the life-blood of many companies. If you are a trading business, then you want to want to buy low and sell high. The difference is the profit that you live on. In this model, managing inventory effectively becomes vital for your business to survive. In today’s increasingly competitive business environment profit margins are often razor thin and bottom lines are very tight.
You want to avoid having hundreds of thousands of Pesos (or Dollars for exporters) of tied-up capital, sitting on shelves depreciating and well on their way to becoming “dead stock.” At the same time you want to avoid having customers clamoring for items that are temporarily “out of stock.”
Best Inventory Management Strategy
What is the best strategy to grow or maybe even just survive in this environment?
Effective Inventory Management is about planning and controlling inventory levels so that we have just the right amount of inventory to meet our business needs. Inventory planning is about how much of what products to buy in order to make a profit using the resources at hand. Inventory Control, on the other hand, is about managing what is already in the warehouse.
Many companies focus on cost cutting initiatives like staff reduction as a surefire way of reducing cost and increasing profits. Some companies even promote using the back side of their printed papers as a cost cutting measure. While these cost cutting strategies may help a little bit, often very little attention is paid to the mountains of slow moving inventory that is accumulating in the warehouse.
Those non-moving stocks could be eating up 90 percent of your company’s resources, while the other cost cutting initiatives impact only on the remaining 10%. Surely, the significant savings should be found in managing the larger 90%. Shouldn’t it?
Effective Inventory Management is about planning how much of what products to buy in order to make a profit using the resources at hand.
The Answer to your Inventory Control Problems
Training your staff on the principles of Effective Inventory Management is the answer. There are many tools and techniques that your staff should learn to properly manage your inventory. These include the following:
- Basic Forecasting
- Pareto Analysis to determine the different segments of your inventory
- Calculating the proper safety stocks
- Calculating the re-order points
- Calculating the optimum maximum and minimum inventory levels
Analyzing your inventory data will give you the insights you need to do the above. Since computers and software have become readily available, analyzing your inventory data can be easily done by your staff on a regular basis. With the correct analysis, you should be able to make the correct inventory decisions.
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.
We have scheduled several great seminars that can really help you get your job done quickly and efficiently. These seminars present proven best practices that will help you a lot. Click on the link boxes below to see the seminar outlines, investment fees and schedules.
Register for one of the Seminars Above
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