Inventory management is a vital part of running a company. The status of your inventory defines the opportunities that might be available. Through this you can also improve expense and asset effectiveness and create a potential for capturing missed top-line sales. It might not be known by everyone, but inventory pulse checks can be a huge lever to improve the financial health of a company. It also helps a lot in garnering and producing sales forecast which in turn will help determine if your company is successful or not.
Knowing the importance of Inventory Audits
Supply chain problems either from manufacturing glitches or distribution uncertainties are drastic and leave customers unsatisfied. Sometimes, it also cause delay and errors in delivering what was ordered. This is why audits are important and useful to identify the amount of inventory required to replenish deliveries per two weeks. It can also help in knowing how to avoid backlog of excess or obsolete inventory.
To cut it short, auditing plays 3 simple roles; to assure safety, to schedule replenishment and prevent any excess.
Calculating your safety stock levels effectively
When it comes to assuring the accuracy of sales forecasts, required production lead times, manufacturing schedule adherence and service-level data for each SKU, you may have followed a rule of thumb or a traditional method just like others. It may have been effective for years. But, still, uncertainty is prevalent. specially without a proper statistical formula used. We have to keep in mind that we are dealing with data that should be treated accordingly and properly to be able to source out quality and reliable results.
With a standard statistical formula, you can process and look deeper into historical data of individual products; giving you a clearer and more accurate sight of definite and actual information which you can use to have smooth and more efficient operations.
When dealing with moving numbers, running a recalculation is what will make sure of the accuracy and up-to-date status of important data. If you are wise enough, then you would be aware that it is important to be done once in a while. So, that you can make sure that the decisions that will soon be made will be based on the most accurate and previous information
Striking the right balance between customer service and cost-effective product inventory
Many decisions about inventory levels are strategically important. So instead of relying solely on the supply organization to decide, executives need to have a major say in the fundamental issues that impact inventory management—everything from determining the right breadth and complexity of product offerings to optimal plant and distribution footprints.
Deciding for your inventory levels should be strategic and precise. There is a need not only for the supply organization but also the executives to focus on issues that will greatly affect inventory management. It depends on them how they will determine the right range and level of product offerings to reach the optimal status of distribution. It’s also up to them how they will balance the customer service as as well as having a cost-effective product inventory level.
Settling the optimal frequency for production and ordering
Time is considered as one of the most precious resource. It is something that you cannot take back. So, it is something that should never be wasted. It reminds us that in a business, everything should be set on proper schedule. It is crucial to have a team manning this task of setting schedule to production and ordering in your company. There is also a need for a well-coordinated presentation of a plan where all factors about sales and operations are weighed. Not only should you be concerned of cutting-off production cost but also reducing the company’s replenishment and ensuring that specific products are made to be available for marketing and promotions