Chapter 17. How to Improve Inventory Management? | Descartes Sellercloud

Chapter 17. How to Improve Inventory Management?

Welcome to Chapter 17 of our inventory management guide. This chapter will look into ways to improve the inventory management process. It may be that you’ve just started managing inventory, or you’re running your own business, and it’s getting harder to handle.

Either way, you may encounter many problems because of poor inventory management, but identifying where problems lie can be elusive. However, you can do plenty of things to recognize what’s holding you back and help you improve inventory management.

How Do You Solve Poor Inventory Management?

It’s an age-old question that has frustrated inventory managers for decades. Some sources say up to 75% want to improve inventory management practices. However, there’s no direct way to solve poor inventory management because it depends on what is causing the problems in your warehouse.

Solving poor inventory management starts with measuring things, such as your KPIs and metrics. If you don’t have a way to measure performance in a warehouse, it will be much harder to gauge how a problem can be solved or how big a problem it is.

However, some inventory management problems will be evident without KPIs or metrics. For example, if there is no logical order to where products are stored, this will clearly need to be changed.

Now we’ve covered that, here are five ways to start improving inventory management in your business.

1. Emphasize the Importance of Inventory Management

This is always the first step. Proper inventory management will save time and energy, prevent mistakes, improve the inventory management process, and make the workplace safer and more secure.

2. Recognize That Not All SKUs Are Equal

Don’t treat all SKUs equally. Some will make your company more money than others, and they constantly need replenishment. You should organize SKUs by which leave the warehouse the fastest.

FIFO (‘First In, First Out’) prioritizes shipping the oldest stock first, while FEFO (‘First Expires, First Out’) ensures that the earliest-expiring products are shipped first.

3. Understand Your Supply Chain and Work with Suppliers

Understanding how your suppliers produce the goods you sell, including how long it takes them to produce them, can help you with your expectations and inform reordering decisions.

It is recommended that you create a ‘Supplier Approved List’ (SAL), a list of suppliers your company has vetted and approved regarding product quality and reliability.

4. Ensure You’re Using the Right Tech and Equipment

You can improve inventory management with the right technology and equipment. Consider if you need to invest in the following:

5. Plan for the Future

You won’t be able to improve inventory management in one fatal swoop. Many things might not be feasible right away due to workload or financial constraints. Planning is vital.

How to Improve Inventory Accuracy?

Improving inventory accuracy starts with using a perpetual inventory system. Here are a few of the best ways:

How Do You Reduce Dead Stock Inventory?

Dead stock can be a symptom of poor inventory management. Bear in mind that many businesses struggle with shifting dead stock. Never have too much inventory on hand.

You can offer dead stock at a heavy discount, as part of a kit or bundle, or possibly ask suppliers to repurchase it from you.

Key Points From Chapter 17