How to Organize Business Inventory Efficiently and Reliably

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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.

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