Inventory management top practices may not be the most riveting subject, but, from a professional standpoint, they are a necessity.
Let’s be honest. If not tracking your inventory on a regular basis, it’s impossible to fully grasp your business needs and how to fulfill them efficiently and cost effectively. The good news? It’s never too late to learn. Following are three need-to-know fact that are going to make your day—and your bottom line.
3 Golden Rules Of Inventory Management
Since we’re talking about nuts-and-bolts management, let’s focus on three main practices that will provide you with a conceptual foundation for success.
Best Practice #1: Supply and demand is an art form
There’s been much debate over how to handle supply and demand, especially due to the evolution of the manufacturing industry in recent years. Consultants spend their time debating the virtues of lean inventory management, meaning that a business either focuses on Just-In-Time (JIT) or Theory Of Constraints (TOC) inventory practices.
Using these models, inventory is kept at the lowest possible level but with a buffer. Re-ordering occurs before the stock runs out. This keeps inventory on-hand and the cost of supplying and holding that inventory low. It’s important to realize this is just one stratagem.
Best Practice #2: Stock accuracy needs to be 98-percent or better
To put it plainly, this means that 98 times out of 100 the information in your computer system must match the stock in your store, warehouse or restaurant. The best way to ensure this constant level of accuracy is to employ the best and most sustainable technological solution for the job. Thus, you and your employees can use your time to better serve customers while trusting that your stock is accurately tracked.
Best Practice #3: Know thy service levels well
This is not an area where you should be too lax or too rigid. Instead, try to land somewhere in the middle. According to inventory management best practices, divide your service levels to minimize inventory issues down the road.
A simple-yet-effective three-tier system should suffice:
1. Critical inventory needed immediately.
2. Non-critical inventory that can wait, but must be on-hand by a certain date.
3. Scheduled delivery of non-critical items received regularly or big ticket items such as furniture that needs to be assembled prior to delivery.
Whether doing business out of a single location or managing a supply chain, inventory management best practices have a considerable impact on your business. Putting these principles into practice will enable you to make beneficial inventory decisions that maximize profit and minimize cost.
Selecting the right technology infrastructure is a key step toward successful, profitable and cost-effective inventory management. Discover what Chicago POS Systems technology can do for you and your business by augmenting the best practices you already know work for your business. We can help your business exponentially develop, grow and serve your customers.