As a manufacturing and distribution business, you understand that inventory is the core of your enterprise. At the time of Covid-19, it is more important than ever to have an inventory management system in place to help navigate your business through this pandemic.There are a number of different inventory management strategies a business can implement to ensure proper management. The hard part is finding the ones that work best for your business. It is important to start taking the right steps to develop a plan, implement it, actively monitor progress and follow that plan throughout the remainder of your fiscal year.
4 Critical Inventory Management Strategies
The COVID-19 pandemic has provided numerous lessons, including for all aspects of the supply chain. Here are four inventory management strategies supply chain leaders and inventory managers can use going forward.
1. Pay attention to consumer signals
Today’s leaders must pay even closer attention to customers’ demands than they ever have. As the COVID-19 pandemic began, companies experienced abrupt shifts in customer demand and channel preferences. The organizations that weren’t prepared likely failed their customers. To have avoided this, companies needed as much visibility as possible into their inventories. A proper digital inventory management system gives a scope of demand forecasting.
Businesses should also question whether the demand signals they’re receiving from their end customers in the short and medium term are realistic. That is, plan for now and the future.
2. Focus on data
Data makes the world go around — it’s as simple as that. The vast majority of businesses are now run primarily by computers and technology. The majority of financial records, for businesses and individuals, are tracked and stored through big data nowadays.
Inventory is no different, of course. Understanding how data is shaping inventory management will help you become more efficient and knowledgeable. In addition the most significant advantage big data offers inventory management is in improving efficiency.Inventory operations include many small, interconnected processes. If just one of them lags, it can cause issues throughout the entire process.
3. Review slow-moving inventory
If you come across product covered in dust from the turn of the millennium while organizing your warehouses, then it’s a great time to review your company’s slow-moving inventory. Moving forward, your business must have a well-thought-out and dynamic plan for its inventory procurement process. In general reviewing inventory is something you should do as many times as possible in your business. It is more important at this time as the demand is fluctuating vastly in these uncertain times.
If you use Excel Sheets for inventory management, you must be used to sitting for hours reviewing sheets for any possible errors. A digital inventory management doesn’t require you to do that as it automatically updates inventory after each purchase order is passed. This reduces the room for errors. It also improves the visibility of the stock as compared to long Excel sheets.
4. Areas Of Opportunity To Pivot
Another critical inventory management strategy is understanding what products are in demand right now. In some cases, this pandemic gives you an opportunity to pivot the business and leverage core competencies in a different direction. Last year left a lot of business owners feeling uncertain about their immediate future. Some companies are trying to manage this situation by reinventing their business model to help them stay afloat in the short term. You would have an overabundance of inventory, subject to spoilage, and nowhere to distribute it. One thing that can be done in this situation is to explore different markets and act fast on manufacturing products that are in demand. Of course, you will also need to stop or reduce the frequency of ordering raw material that is no longer being produced.
You may also have an opportunity to simplify your business model. Let’s say that, normally, your inventory is made up of 1,000 stock-keeping units (SKUs). A number of these SKUs contain seasonal items, specialty items and items that require a complex production process. During this period, focus on the products in your inventory that are your main source of revenue. Rework your inventory to allow for as limited SKUs which will help with slow-moving inventory management and cost reduction. Therefore, limiting your company’s product offering and focusing on the items that drive revenue will help ensure accurate inventory purchasing. Keep in mind, this is not a typical year for operations, and prior year’s sales trends and product purchase history may not be the best indicators to use when discussing procurement.
The pandemic is a fluid situation. To be operationally effective, you must work with stakeholders to continually engage in forecasting activities and make adjustments when necessary. There are a number of different avenues for a manufacturing and distribution business to navigate through this environment. Carefully considering the most efficient and effective course of action to keep your business operating in the short term may ensure the success of your business in the long term.
In these difficult times, you can just not be relying on your inventory registors or excel sheets to make important decisions. You need an easy to use and affordable inventory management platform like TranZact. TranZact has been in the business of providing digital solution to SMEs for over 3 years now. What’s best about the roduct is that it’s basic version is free to use forever. Sign up today to know more.