It’s been a challenging year for supply chain management. Faced with limited resources, systems, and processes, organizations worldwide have struggled to manage and react to unpredictable inventory fluctuations and complexities across fulfillment channels. Yet, even amidst so much disruption, it’s arguably more important than ever to optimize inventory management processes.
Inventory management is the linchpin for countless organizational processes. Without inventory management, customers won’t have the visibility they want, logistics partners won’t have the data they need, and your warehouses will struggle to keep up with orders. To help uncover new (and more effective) best practices for improving inventory management, check out our webinar on Inventory Management.
Here is a sneak peek into some of the inventory management insights discussed in the webinar.
How to Improve Inventory Management in 2020
“If you don't have inventory management in place, how are you going to be planning the manufacturing process?”
This is the question that lies at the core of any plan to improve inventory management. For example, consider the illustration below, which outlines how inventory management is intrinsically linked to three essential pillars of business.
Should one of the “triangles” outlined in the graphic above be affected, the entire system will become unbalanced, which will inevitably cause each area within that system or process to shift in ways you probably can’t predict.
Here are three areas to improve inventory management in your organization:
1. Invest in Processes and People
You can’t have a company without people, and your people can’t do their jobs without processes to guide them. The first step to take when planning to implement a logistics or supply chain management system is to analyze its internal processes.
Consider this survey from 2016, which looked into the processes of 230+ companies in Poland and found that most businesses had documented and repeatable processes, but only 4% actually measured and managed them. Even if that statistic doesn’t translate exactly to your organization, it sets a precedent that’s hard to avoid; very few companies are committed to measuring and managing the efficiencies of its processes.
Without proper investment in the people and processes, organizations will run into challenges with inventory control, labor, space, quality assurance in the distribution center, order fulfillment, and order cycle times.
Even if people and processes are equipped with top-shelf technology, preventable roadblocks will arise if methodologies are not more defined, dynamic, and optimized. Implementing the best system on top of a less-than-perfect process will help you achieve benefits, but not the optimal benefits you actually want.
2. Take Advantage of Infrastructure and Technology
After the appropriate processes have been aligned with objectives, organizations should focus on the necessary technology and infrastructure that support those people and processes.
Current supply chain processes and ecosystems have become more reliant on digital infrastructure, and failing to implement these systems can stunt an organization’s ability to adapt to industry trends and scale growth. When it comes to inventory management improvement methods, taking advantage of intuitive and effective technology is crucial to success.
Consider how Statista reported in 2015 that “the global warehouse management system market was valued at 1.2 billion U.S. dollars” and correctly predicted that that number would continue to climb into 2024 and beyond. Yet, despite the massive adoption rates of technology, less than half of warehousing and logistics providers use a legacy warehouse management software.
In addition to a warehouse management system with the features to streamline and improve inventory management, organizations should also research appropriate mobile barcoding technology tools. This technology is valuable during the COVID-19 pandemic—as it limits person-to-person contact— and also helps save on labor costs by helping:
- Eliminate hand-to-hand paper transfers and typing
- Update your ERP in real-time
- Provide long-range barcode scanning
- Enable remote communication between management and the workforce, reducing the need for in-person and/or onsite meetings
Connecting technology will improve organizational infrastructure and streamline internal processes that can help improve productivity. Like we saw in the graphic above, each pillar of inventory management affects another, and it’s that reality that should guide your inventory management improvements.
3. Explore Supply Chain Data and Industry Insights
Any good inventory management strategy will have systems that will be gathering a lot of information, but what good will that information be if it’s not studied?
With the right people, processes, and technology in place, organizations can begin to review data and use it for business intelligence purposes. This will go a long way toward helping your company improve areas like demand planning, warehouse operation, and fulfillment.”
An article on ZDNet explains what can happen when a company does not use its supply chain data:
“There [will be] a disconnect between perception and reality of business’ real-time data analytic capability. Business leaders believe that they are in tune with analytic needs, while developers know the sad truth of the situation, which is that real-time data analytics either do not exist or are not up to expected standards.”
The disconnect ZDNet points out can, and usually will, lead to problems across facilities that affect the visibility and traceability of your inventory, lots, product pallets, and other factors that will ultimately inhibit your supply chain inventory management efforts.
Improving Inventory Management = Improving Company Success
Implementing streamlined, adaptable, and reliable inventory management systems will provide visibility into the available inventory, the number of units ready to ship, and how quickly they can be delivered to the retailer or end-consumer. This will help prevent delays during inventory shortages or other roadblocks.
The image below portrays the areas with which inventory management interacts.
These processes will improve when inventory management operates at peak efficiency and accuracy.
To hear more about how inventory management can improve every link in your company’s supply chain, register for the full webinar with Fernando M. Gonzalez and get an even deeper dive into these insights.