10 Way to Manage Inventory More Effectively
Saturday, November 02, 2013
Inventory management is the process of overseeing the flow of products and services
in and out of existing inventory within an organization. It also involves controlling
the transfer in of units to prevent the inventory becoming too high, which can
tie up needed capital, or too low, which could put the operation of the organization
into jeopardy. Inventory management not only documents the movement in and out
of inventory but also tracking the units as they are used to create finished goods.
In an article by Sherrie Scott, Demand Media she states that there are “ten top
ways to manage inventory. 1)Supplier Assistance – soliciting the help of suppliers
by giving them vendor access to inventory data. 2)Inventory Control Personnel –
hiring a dedicated inventory control specialist that manages inventory on hand
and in transit and also performs adjustments, manages returns, validates received
merchandise, and implements inventory reporting strategies. 3)Lead time – establish
reports to determine the amount of time it takes to replenish inventory. 4)Monitor
Inventory Levels – determine the inventory demands of the business to prevent high
levels of inventory, which causes increased levels of expense and overhead costs.
5)Customer Delivery – measure inventory turnover and delivery turnaround time.
6)Inventory Consultant – hiring an outside consultant to develop and manage internal
inventory systems, and is also responsible for maintaining accuracy, cycle counting,
shipping and receiving, and managing order-picking operations. 7)Purchase Software
– designing an inventory management database or purchasing inventory management
software that can be customized to fit the needs of the business. 8)Product Turnaround
– establish a system that pinpoints which products move quickly and which products
take more time to sell. 9)Tracking System – developing a system to manage inventory
and monitor turnaround times, either through a spreadsheet or a computer program.
10)Work in Progress – tracking “work-in-progress” materials as they move through
different operational stages allowing businesses to adjust order amounts before
inventory gets too low. Inventory management not only maintains control of various
inventories, but also makes it possible to prepare accurate records that are used
for accessing any taxes due on each inventory type. Without precise data regarding
unit volumes within each phase of the operation, taxes cannot be calculated accurately.
This could lead to underpaying taxes due and incurring still penalties in the case
of an audit.