Any firm that wishes to maximize its merchandising process must have an effective inventory planning process. With the right technology in place, it is possible to track products more effectively, organize things better, generate reliable data and reports, and improve warehouse productivity—all of which boost sales.
Today a majority of firms have the potential to drastically improve their operations, especially in their warehouses. But if you don’t start modernizing and streamlining your company’s operations, you’ll quickly develop bad habits, wasteful routines, and expensive inventory costs.
With the right strategies & approach, you can maintain and manage an effective business year after year by adhering to best practices for inventory planning.
Objectives of Inventory Control
Inventory control is the critical part of your inventory management system that deals with what is currently in stock. It involves being aware of the state and location of the things and having control over when they enter and exit the warehouse.
A comprehensive inventory control system specifies how much of an item is on hand and keeps track of when supplies are received and when deliveries are shipped. It optimizes and manages every part of the warehouse’s stock. Inventory control is used to aid warehouses in reducing overstocking and under stocking, optimizing storage areas, and preventing loss.
Inventory Planning Best Practices
There are numerous best practices for industry-specific inventory planning, but there are also a few universal guidelines that every company may use.
Let’s have a look at some of the best practices now.
1. Develop Active Relationships with Your Suppliers
All businesses are based on relationships, and we frequently consider the relationship between our customers and our company.
There is no questioning the value of creating strong relationships with your consumers, but your company will benefit from doing the same with your suppliers.
Your company’s suppliers are its lifeblood, and by cultivating strong bonds with them, you can frequently benefit from advantages.
These “benefits” could range from something as minor as extra attention when there’s a problem with an order to something as significant as guaranteeing that your orders are filled when there isn’t enough inventory to go around.
2. Keep Accurate Stock Records
Using a good inventory planning software makes it easy to maintain precise stock data. The inventory is updated automatically when things are scanned in your warehouse, shipping facility, or retail outlets.
You can always know how much of a particular item you have when placing a new order and other details by keeping precise stock records. Precise stock records support accounting, warehouse management, marketing, and other business areas and keep you from carrying too many or too few of certain things.
Over time, inaccurate stock records accumulate. A slight inconsistency today could develop into a much more significant problem tomorrow.
3. Utilize ABC Analysis for Categorizing Inventory
It is not a novel idea to categorise inventory using ABC analysis. By using ABC analysis, supply chain leaders can better understand stock activities and how space use affects overall cycle durations and productivity.
You may maximise storage space and speed up order fulfilment by organising your inventory in your warehouse according to how well it sells and how much value it adds to your company.
4. Use a Cloud-Based Inventory Management System
Manual inventory tracking is not only antiquated but also nearly impossible in the modern world when businesses frequently operate worldwide. Managing inventory is now more complicated than it was only a few short decades ago because of various warehouses, international shipping, and global supply chains.
Modern inventory planners can automate large portions of your inventory management process. Because machines read codes on objects rather than people manually entering numbers, barcode and RFID scanning eliminates human mistakes.
Beyond that, by ensuring you always have the right amount of merchandise on hand, inventory management software helps prevent expensive issues like overstock or overselling. Thus transforming your entire supply chain process from ordering, shipping and warehousing.
5. Establish Economic Purchasing Procedures
Making sure you have the appropriate inventory stock levels for the demand that each product creates is an essential aspect of inventory management.
Because of this, it’s crucial to set up processes for figuring out how much inventory you need to carry, item by item.
You need to carry less of a product if its sales are declining or not doing well. With this insight, you can modify your inventory recommendations more effectively to fulfill demand. The same holds true for popular goods.
It’s time to think about liquidating your inventory of unsold items so you can move on to other things if they don’t look likely to sell again.
You can view inventory levels, sell rates, and other information using intelligent inventory planner software.
6. Split Inventory into Different Categories
We view inventory as one oversized, amorphous item, including all the goods and equipment used in manufacturing in our company. Inventory tracking may become difficult as a result.
By categorizing goods, you better manage your inventory planning issues. Although you will still have a single overall “inventory,” grouping products into different categories makes it simpler to assess the performance of individual products.
There are many different methods to divide your categories. Don’t think that it is limited to product type. Inventory can also be divided based on factors like quick turnover, profitability, etc.
Consider the analogy of the ancient forest and trees. Your entire inventory is the forest, but by categorizing items, we can concentrate on certain trees that might require care.
7. Maintain Inventory in Multiple Locations
Supply chain managers must be able to manage inventory across all physical locations, including brick-and-mortar businesses, in the omni channel supply chain environment. Managing inventory across physical locations is crucial for businesses utilizing purchases online and pick-up in-store (BOPIS) fulfilment.
8. Utilize Data to Improve Lead Times and Demand Planning
In order to manage lead times for transportation requirements and enable improved demand planning to match changes in the sector, technology and data are particularly important. For instance, supply chains will begin planning for peak season months, if not seasons, in advance. This demands extensive data analytics capabilities.
About the Company
Fountain9 assists businesses in implementing the best practices in inventory planning with their inventory planner known as Krono scope. Kronoscope can help businesses optimize their working capital by accurately predicting stock-outs and suggesting appropriate safety threshold levels. Businesses can stock their inventory optimally while considering the forecasted demand for the upcoming period, thus reducing the complexity of managing extensive inventories.
Kronoscope also prevents overstocking by proactively identifying SKUs that are at the risk of getting piled up at various levels in the supply chain. It can Identify SKUs ideal for liquidation by proactively monitoring SKUs piling up (getting overstocked) at any level in the supply chain and helps avoid wasted procurement/replenishment time, unnecessary expenses, and opportunity costs.
Refer to this page & include some of their points also https://veridian.info/inventory-management-best-practices/