Did you know that no matter how successful a business you are running, it could fail at any given moment?
Relax, don’t panic. Sit down and have a glass of water.
I am not telling you that your business will fail, no matter what.
I am talking about a specific situation, namely, inefficient and ineffective inventory management tips.
If you didn’t already know, discrepancies in inventory management could be catastrophic for your business.
Yes, we all make mistakes. But, some mistakes can cost you your business.
For example, did you know that Nike once made the same mistake?
They did not control their inventory effectively. Thus, in the early 2000s, they had to take a big hit.
Do you know just how big that hit was?
Nothing short of a punch in the gut. The company lost $100 million in sales, approximately!
You can exhale now.
Yes, that figure is a big one. Following the unfortunate incident, their stock price plummeted by at least 20%. They also had to defend themselves against several class-action lawsuits. Soon enough, they became the poster child for careless implementations.
But, Nike was able to regain its footing by implementing an improved inventory control system. Can your business do the same?
Remember, if it can happen to such a big shot company, it can happen to you too.
What is Inventory Management?
All this talk about effective inventory management must have gotten you thinking; what is inventory management? How do you manage inventory? How to keep inventory safe?
Well, have no fear! The answer to all your prayers and questions is here!
Inventory management is a process related to the supply chain where stock and inventory quantities are tracked as they move in and out of your storage. An inventory control system aims to tell you where your inventory is at any point in time. It also indicates the exact quantity so you can manage it better.
But, what are the methods of inventory management followed by business today?
Well, have you ever gone to a supermarket? When checking out, the cashier will turn the barcode in the direction of a curious-looking machine. Nanoseconds later, you hear a small BEEP.
The barcode reader increases the efficiency of inventory management along accuracy and picks routes.
Moreover, these methods can be integrated with other relevant software systems. These include shipping, channel management, and point of sale.
All of these can help you build a more personalized connection with your customers!
Causes of Inventory Discrepancies
I have found that the best way to manage inventory discrepancies to make sure to avoid them in the first place.
Well, I am certain, some of it might seem apparent but, hear me out.
Not everyone has a good understanding of the usual causes of such ineffectiveness. Read below to know some fairly common ones.
- Incorrect weight of stock or the use of inaccurate units of measurement.
- Misplaced stock after being received. This occurs typically due to incorrect labeling, wrong location, and storage area.
- Material wastage owing to theft, and inappropriate handling of materials. Returned and damaged stock is not correctly recorded in the database.
- Suppliers not delivering the quantity indicated on the record of dispatch.
- Failure to maintain and update an accurate and effective inventory control system.
- However, the most important one remains. We call it human error. It can occur at any point during the processing of the order or handling the materials received. The human error can also arise when there is an error at the time of stock take activities. These can result in errors in calculating and counting stock balances. Incorrect data entry and clerical errors at the time of issue or receipt of stock are also part of this phenomenon.
The question remains. What is the best way to prevent such inventory errors from occurring?
The answer is simple; Use an automated system and prevent human error!
Inventory Management Tips to Reduce the Chances of Human Error
Here are some inventory management tips to help you manage your inventory better and avoid any form of human error.
1- Simplify processes for all your employees
Regardless of which inventory control system and software you use, all businesses can benefit if they simplify their processes.
Make sure to do a careful analysis of all the processes in your existing stock management approach.
Are there any unnecessary steps?
If yes, time to put them to sleep!
Remember, the more complicated the process, the higher the chance there is of human error.
We don’t want that now, do we?
But, there may be some products with certain exceptions in terms of steps. Do not make the mistake of eliminating those!
2- Track all items through location
Instead of focusing on organizing your inventory by type, you should opt to organize items by location.
Moreover, get rid of age-old methods of manually categorizing each item every time a new one is stocked.
Do it my way, and you will not have to reorganize over and over again! Get a mobile WMS and you will thank me later.
This is one factor that benefits all businesses.
You can now defeat the human error by offering enhanced training programs and refresher sessions.
There will be an initial time investment. But, you can claw back these expenses when you are making the big bucks!
Training should be focused on the latest software use. Additionally, pay special attention to those areas where employees are hesitant. The lesser their confidence, the more reluctant they will be to use the software.
4- Clarify locations
The more quickly and clearly you mark the locations, the lesser will there be a chance of human error.
Workers will not have to play hide and seek to find them!
After going through this complete guide, you must be ready to set up an effective inventory control and management system. Do not waste time thinking about it.
Don’t make the same mistake Nike did!
Do what you need to do today!