XAVIER LLAGUNO
Inventories represent one of the most valuable assets within a company since they are the main source of revenues. Inventory management makes sure these assets are taken care of in the most efficient way by controlling and storing them.
As any other asset, inventories have some costs. Inventories need to be stored in warehouses that need maintenance. These inventories have obviously undergone a production process and will be sent to clients once the order of sale is accepted. All these involve labor costs, shipping costs, material costs and so on. Moreover, there is also another cost that should not be forgotten. When there is not enough stock to supply a client, either because of bad demand forecasting or resources scarcity, the client will be affected as well as his trust towards the company. The numeric cost would be the foregone sale, but an unhappy client could be more harmful for the company.
A good inventory management not only reduces costs, but is also a source of differentiation against other competitors. Without thoughtful organization, you risk delaying delivery to customers and creating an inefficient staffing system that increases your labor costs.
Last week we talked about demand planning. A company able to forecast its demand will not produce or store more than it should, and will definitely keep their clients happy. A happy client will keep buying from you and, what is more important, recommend you to other clients.
What can we do to efficiently answer to highly demanding markets?
- Good demand planning: will prevent extra costs (break of stock, overproduction…)
- Assess demand of goods: find out what products are most often sold and organize your inventory / warehouse based on volume and frequency.
- Map and label everything: it will make it easier for workers to sort out the right items
- Upkeep system: set a system in place, whether it is daily, weekly or monthly, to restock shelves with items that are out of place and perform quality-control checks
The above actions can help a company reduce its service lead time and so, deliver a better service to their clients.
References:
http://smallbusiness.chron.com/organize-storage- inventory-warehouse-13246.html
https://www.tradegecko.com/learning-centre/what- is-inventory- management
https://www.relexsolutions.com/how-to- organise-your- inventory-management-team-for- maximum-impact/
Business Logistics 