5 Ways to Improve Inefficient Inventory Management
As businesses look for improvements in their companies, they should consider assessing their inventory management systems. Any kind of inefficiency can negatively affect your business, impacting how your customers view your services and how you compete with similar companies.
Prioritize inventory management efficiency today and discover how you can improve it with five essential tips.
What Causes Inventory Inefficiency?
If you are evaluating your inventory management system, know the symptoms of poor inventory management:
- Poor planning: Inventory management includes several essential processes, from sourcing and selling products to storing and delivering them. Warehouse and inventory managers must plan carefully to balance these procedures to optimize each factor.
- Miscommunication and no coordination: Inventory management and storage are just one aspect of a grander picture — the supply chain. You will need to communicate with suppliers, vendors and other employees, many of whom will work for other entities.
- Lack of monitoring and tracking: You need to monitor and track products as they move along the supply chain to communicate accurate expectations with customers. Further, you need to watch product levels and conditions while in inventory. Products can spoil or lose quality if stored for too long, decreasing customer satisfaction or revenue later.
- Inaccurate forecasting: Businesses need to be able to predict demand trends to determine how many products to order. Without an efficient inventory management system, you might have to handle overstocking and understocking as the market shifts.
While many factors fall on inventory and warehouse management, some can be external. You might experience unforeseen shipping delays that cause you to run out of inventory or products that arrive damaged. However, having an efficient inventory system can mitigate these effects to support your business’s resilience.
The Effects of Poor Inventory Management
Maintaining efficiency with inventory management is vital. Lack of proper inventory management can lead to loss of revenue, as you lose customers and products. Understanding the consequences of poor inventory management can help you see when its time to prioritize efficiency:
- Losing customers: Customers appreciate speedy services that deliver results instantly. When they order products online, they want you to have them available always. When they see that an item you listed is out of stock after placing an order or while searching for products, they are more likely to abandon their orders than wait for you to restock. Instead, they will turn to your competitors, who can provide similar products and better customer services.
- Overstocking items: Overstocking items might help prevent shortages, but it can come with other downsides, like decreasing the product’s quality as it sits in storage. Further, you will often have to account for the extra costs of storing overstocked items. Sales, discounts and bulk orders can help clear space and get rid of products, but you might receive a lower revenue than expected.
- No tracking or forecasting trends: Inefficient inventory management makes it hard to accurately track and forecast trends because you need comprehensive historical data to make decisions when ordering products. This management style lacks the technological infrastructure required to support this tracking and ordering.
Poor inventory management can affect all levels of your business, from customer experience and satisfaction to your company’s revenue and costs. An efficient inventory management system can help you support your company in many ways.
5 Tips to Boost Your Inventory Management Efficiency
When determining how to fix inefficient inventory management, you will need to implement new tools and strategies. These changes can improve your customer relationships and business performance, helping strengthen your company and its presence.
1. Automate Your Operations
Automation can help businesses organize and streamline tasks. You can set thresholds for specific products, and the system will automatically order a determined amount when product counts reach that threshold.
This system can help prevent your company from selling out on popular products, ensuring customers can always receive the goods they want. It can also help with less popular items, maintaining inventory levels when your attention might be on other products.
2. Implement One-Click Purchase Orders
One-click purchases allow your customers to order items immediately. When customers search for companies that provide immediate services and quicker results, you can give them what they’re after by simplifying the checkout and purchase process into one action.
Your customers will appreciate the effort you put into improving their experiences. Investments like these can help strengthen customer loyalty and your brand.
3. Centralize Tracking
Product and inventory tracking can help improve efficiency in many ways. Employees and managers need to know how much of each product they have available, so they can determine when to make orders.
Tracking can also help preserve product quality. An advanced system can determine how long a product has been in storage and organize products to ship older items first, optimizing their shelf lives.
A centralized system can help all employees understand each product’s vital information. When employees can access data about any product in one place, they can improve efficiency related to storing and shipping practices.
4. Accurate Demand Forecast Tracking
Automated systems can help track and analyze data about your products and business trends. When demand levels depend on past information, having a solution that can provide you with the reports you need to make decisions is vital.
Automated software can track demand trends on many levels, from monthly to annual reports. When you have access to extended trends on products, you can make more reliable and specific forecasts for future product fulfillment. Instead of general estimates, you can better determine exactly how much you’ll need.
5. Maintaining Safety Stock
Safety stock is the practice of ordering more than you need to preserve your inventory in unpredictable circumstances. These situations can include sudden shifts in demand, damages and supplier delays. With a safety stock, you can continue filling orders while solving problems behind the scenes, keeping your customers happy.
However, safety stocks are different from overstocking. You will have to determine the balance between a safety stock and overstocking based on revenue and costs. This amount will depend on each company and warehouse, helping to meet their needs.
Maximize Your Efficiency With Finale Inventory Software
Optimizing your inventory efficiency can help build stronger customer relationships and protect your revenue. Having the right tools ensures you strengthen your efficiency and streamline processes.
Finale Inventory’s Cloud Inventory Management software solution offers a centralized database to help companies of all sizes better manage their products. We designed our solution to scale to fit any business, and it will grow as you do. Implementation is easy, as it integrates seamlessly with other enterprise platforms, including QuickBooks, Excel and Square.