A business manufacturing and/or selling products is wholly
dependent on the smooth processing of orders and inventory organization &
maintenance. Any slowdown at any point in the logistics pipeline leads to
products not being where they should be, which in turn leads to your brand
value not being where it should be. Thus, you need to pay a lot of attention to
how you are organizing your business's inventory at every node of your supply
chain, including the storage space at the factory where the finished goods are
first placed.
This organizing is easier said than done due to the large
quantities of data that comes associated with the process. And this is besides
the human and other variables in the mix. You need accurate, efficient, and
cost-effective data management to maintain your inventory well, something
experts at renowned data management services providing agencies can do.
This blog explores the many ways you can go about organizing
your inventory for the best supply chain progress, the challenges of doing them
in-house, and how outsourcing the process helps.
Ways to Organize Your Business's Inventory
Here are some of the ways you can make your business's
inventory organization more efficient and effective to reduce losses and
ambiguity.
1. Ascertain Basic Organizational Information
When you're overhauling something, it's best to start from
the basics. In the case of inventory organization, the basics involve
ascertaining important information like:
- The number of storage facilities available
- The maximum storage capacity of individual storage
facilities and the entire storage system
- Current space occupied by inventory in each storage
facility and of the overall storage capacity
- The average time elapsed between a product being at a
factory to the final warehouse before its departure for the destination of its
purchaser
- The total quantity of raw materials being supplied and
removed from storage during a certain period, etc.
This information can be combined to create a broad view of
the status of your storage infrastructure and the support mechanism you have in
place for inventory management. The analysis of this data will help you
identify the pain points that are dragging your inventory organization
efficiency down and the possible solutions that can be applied to eliminate
them.
With large volumes of data to be analyzed, you can opt to
seek professional help by hiring experts from dedicated data management service
providers. This is ideal, since in-house resources may not be able to deal with
such vast amounts of data, considering it is not just present data that you'll
be dealing with but also a lot of past data, leading to scale issues.
2. Get Your Raw Material Management in Line
Inventory management starts right from the raw materials
procurement stage. If you're a manufacturer, then you should keep a good eye on
the inflow and outflow of raw material concerning its storage.
If possible, separate storage for raw materials and finished
goods. Having such isolated locations for each helps as you can
compartmentalize inventory management of both these facets of your business
from the ground level. It greatly reduces the chances of a mixup that could
happen when the two are placed together.
The isolation of the storage of raw materials and finished
goods should also extend to the software aspect. The software tool you're using
for managing the two should have separate sections for each to avoid confusion.
It's even better if the data for each storage type is also isolated in
different data storage sections. This way, if someone wants to use the data
manually, there is a lower risk of them saving the data in the wrong
section.
There must also be stringent quality control measures in
place to ensure that the raw material you've procured is of acceptable quality.
Otherwise, you've run into production problems later down the pipeline. Different
types of raw materials should also be sorted into respective categories and
stored accordingly for easy access and monitoring.
Such organizing helps immensely when you decide to scale
your business, as you can also easily organize the associated data. In case the
scale of data is too much for your in-house team, then it's advisable to hire
experts from an external data management services provider to do it for you
without scaling issues.
One other aspect of raw material inventory management that
you should always be aware of is the source(s). The quality of the
vendor/supplier you choose plays a significant role in how well you can
organize your inventory overall. Choose those that can deliver both the quality
and quantity of material you require reliably.
Discuss the particulars of your partnership before
onboarding them, especially the cost and average turnaround time between
placing an order and having it delivered. This information will help you
allocate the required storage space for the material at the right time.
3. Use Item Categorizing Based on Importance
If you're producing/managing multiple types of goods or
multiple versions of a product, then you're likely to recognize that some
versions of a product/type of goods are selling more than others. You can
categorize your inventory based on these criteria to make the entire inventory
management process more efficient.
A common technique used here is the ABC method, where the
inventory is classified and labeled A, B, C, etc. based on the value they hold
for your company. Category ˜A' would point to the most essential items, and the
subsequent labels containing items decreasing in importance to your company.
The value can be determined by how fast the items are moving from your storage
or some other relevant factor.
For example, you can store the fastest moving goods closer
to the exit and on the lower shelves than the rest as it reduces the time taken
to retrieve, appropriately package, and send the items out. If you placed them
in random orders in your warehouses instead, you'd be wasting time and money
finding and processing the items for shipping every time an order for it is
placed.
4. Ensure Compliance without Fail
A variety of regulations affect the different industry
niches, with some specifically applying to the supply chain. You should ensure
that your inventory management system is compliant with all applicable
regulations in every region in which you're operating.
About your warehouses, structural and maintenance
regulations should be enforced rigorously. Otherwise, if inspectors find
violations, they can shut down warehouses till the time they are satisfied that
the buildings comply with safety, environmental, and others. Then, there are
labor laws to comply with; violation of those will bring lawsuits to your
doorstep by your employees. This would not only hurt your business's workflow
but also bring down your brand reputation.
You need to ensure that any employee management framework
you have in place is giving you regular data about them. You can analyze that
data to know if there is a possible labor law violation occurring at any of
your warehouses. You must also take into account the variations in labor laws
across regions and comply accordingly.
Other compliance requirements could include regulations
regarding the various business partnerships you forge for material supply,
premises maintenance, etc. Following those laws will help keep such
partnerships free of conflicts, facilitating smooth inventory management.
Financial regulations are another aspect of the law that you should comply
with, besides data security and privacy.
Compliance with all those regulations across multiple
regions will involve large quantities of data that could be overwhelming to
manage by your in-house team, especially if the operations are international
and in real-time. You can hire experts from a dedicated data management service
provider to ensure that you're not left in the dark about your compliance
status.
5. Maintain Buffer Stock
The market is fickle, with sudden demand increases always
being a possibility. There could also be other extremities that could affect
your supply of inventory, such as a storm preventing a cargo ship from reaching
a destination in time while the demand in that market for your products
skyrockets. Your company can't be unprepared for such circumstances, as not
being able to fulfill the extra orders will mean a hit on your brand
value.
This is where having some extra stock of your products comes
in handy. You can immediately ship that stock out and not have to struggle with
ramping up production out of the blue. It puts the staff at your warehouse and
factories at ease, helping to maintain their composure and engagement instead
of stressing them, which could lead to poor inventory management from their
end.
6. Regularly Train Your Employees
Your employees form a critical component of your inventory
organization system. If they are performing at their peak, with full knowledge
of their role, then you can rest assured that your products will keep moving
without hitches. Imparting regular training helps maintain their job
awareness.
The training material should contain a thorough explanation
of your company's standard operating procedures (SOPs), your company's employee
policies, troubleshooting mechanisms they are to follow in case of emergencies,
details of how to operate systems that they need to use for their work, and the
like. Keeping them up to date with all the regulatory compliance they must
participate in also helps immensely with your inventory organization.
7. Automate Everything You Can
Automation is becoming a mainstay at warehouses, factories,
and associated offices, and you should embrace it wholeheartedly. Not only will
it streamline your workforce, but also make your inventory management
efficient. This is besides cutting down costs. Have an external company build
an AI for your various inventory-related activities.
Use robots on warehouse and factory floors to carry out
various tasks. Implement the Industrial Internet of Things (IIoT) wherever
possible to track your inventory organization's many aspects. You will get
accurate data about all of those aspects that you can analyze to further better
your inventory organization.
Conclusion
Customers cannot wait to have products produced by their
favorite brands, especially in this age of eCommerce. If your brand has managed
to attract a customer base that creates a large demand for your products, then
you should make sure that those customers will always get the products they
desire. It is critical to manage your inventory with 360-degree data support
to make it more efficient and effective. Also, this is the ideal way to achieve
a regular order fulfillment cycle. With data management tasks taken care of by
experts at a dedicated, experienced data management service providing agency,
completes the puzzle, giving you a clear picture of how your inventory
organization is being implemented.