Sometimes, inventory planning can be a hit and miss situation for business owners and warehouse managers. Do you know how much inventory you have on hand, or how much you need to order? Does your business experience stockouts, delaying shipping times? Do you have too much stock of slow-selling products taking up valuable space in your warehouse?
Every distribution company needs inventory planning to maintain its profitability. Inaccurate inventory can cause expensive problems across all departments within your business.
As a result, you may lose out on additional revenue opportunities, carry unnecessary overhead, and cause you to miss your company goals.
If you manage your inventory correctly, it improves profit and cash flow, so understanding how much inventory you have the amount you need to meet future demands is essential to the overall health of your business.
Let’s take a look at how JD Edwards Managed Services and an ERP helps your business plan and manage inventory issues so you can reach your goals today!
1. Prevent Stockouts
Having no stock on hand can cost your business lost revenue opportunities, and if you are frequently out of stock then you could start to have customer service issues. If your customer orders always arrive late, or the customer can’t find what they want at your store, they’ll go to your competition.
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Stockouts can be caused by several issues coming together at once, but the most common reasons that lead to a lack of inventory is poor inventory planning during the ordering process.
It would help if you had an effective stock formula to calculate demand forecasting. Here are some ways that you can prevent stockouts to ensure your inventory is always at a healthy operating level
- Regularly count inventory: Count your inventory on a consistent schedule to maintain adequate stock levels throughout the year and during times of high demand.
- Calculate your metrics: Use your sales history, average sales, and actual demand to give you a formula you can use to determine how much stock you need on hand to meet demand.
- Software solutions: Inventory software systems help you automate manual procedures, providing a central platform for your data.
- Organize the warehouse floor: Keep things organized and maintained so that you have a clear indication of stock available at any time.
- Understand market trends: Stay informed of trends in your industry and current economic conditions.
2. Minimize Overstocking
Keeping too much stock in your warehouse will cost your company money, but having too much product on hand can have a big impact on your company’s bottom line as well.
Not only does overstock reduce your cash flow, it also requires your warehouse staff to organize and manage additional goods that are not making your company money.
In some cases, overstocking may result in wasted product, which your company will need to discount or throw away to make room for new inventory.
Perishable items such as chemicals, food, and cosmetics may spoil if they spend too much time on the shelf.
Unsold inventory sitting on warehouse shelves costs your company money and disrupts your business data if you don’t take it into account in your reporting.
All products in your warehouse require categorization and tracking to ensure you aren’t wasting your warehouse space and costing the company money. Minimize waste and reduce your costs by implementing management processes to understand your inventory levels.
Understand your sales history and prevent overstocking by developing an effective formula to calculate demand forecasts.
- Execute an inventory system by implementing an inventory system helps to provide information and updates to your stock levels in real-time, providing accurate stock counts.
- Study the data and look for patterns that show your deficiencies or gaps in your stock. Data management software identifies overstocking trends, allowing you to keep an eye on product wasting and demand forecasts.
- Show the data to your colleagues and team members to give them an idea of how to enhance efficiencies in the business that eliminate inventory problems.
3. Improve Inventory Forecasting & Processing
Calculating demand forecasting is not necessarily always the issue at hand. If a company is well aware of its stock available in the warehouse, has excellent processes on hand, and keeps abreast of industry trends, then there may be another issue.
Warehouse logistics is an area often left unmonitored in large companies that are dealing with inventory issues.
Vague warehouse procedures result in double work by employees, costing the company money and lost labor time. Warehouses need a defined organizational chart with a hierarchy of authority in management that controls every aspect of the logistics process. Without structure and order, your warehouse will descend into chaos.
Fortunately, there are solutions available to streamline warehouse processes and ensure everything runs smoothly with your inventory planning. Maximize your human resources.
- Ensure that your employees understand their role in the company, as well as their job description.
- Training and accountability: These two factors are vital if you want to know what happened and when. Periodic training helps to relieve any confusion and keep employees up to date on the latest developments in warehouse processes and technology related to their role in the organization.
- Process automation: This strategy curates your data and decreases the time required to complete manual tasks. Removing the possibility of human errors by implementing automated solutions helps to minimize mistakes and downtime due to human error.
Inventory Management Best Practices
Implementing sustainable practices in your warehouse is the best way to ensure that everyone is on the same page. Complete the following tasks to help you coordinate your business activities and employees in your warehouse.
Automate as many manual processes as possible to prevent human error. The software helps you track orders, manage the logistics process, and the age of products sitting on your shelves.
Improve efficiencies by collaborating with other departments to improve operations.
Ensure that your employees receive the right training in processes to manage their workflow.
It’s vital that you take into account all relevant data when implementing your demand forecasting system.
Organizing your data assists you in improving your outcomes while saving both money and time in your warehouse operations.
An ERP Can Help You Improve Your Business Operations!
A critical aspect involved with inventory planning is your people. Everyone involved with the company plays a crucial role in the success of your business. Implementing a training program helps your employees understand their job, improving your warehouse efficiencies, and inventory management.
By holding your employees accountable, you ensure that they adhere to the processes and rules involved with effective inventory management with JD Edwards Managed Services.
No matter the issues facing your distribution business, making use of processes to manage your data, your inventory, and your people, help you clear a path to your business goals.