“Sorry, we are out of that item.” How often have you heard that during a shopping trip? Even popular e-commerce websites are littered with inventory out of stock notices on top selling items. Inventory management is a complex and crucial part of any organization. But how can you achieve optimized inventory levels?
When stock balances hit zero, a company has essentially failed to manage their inventory replenishment correctly. They have not replenished their inventory in time to avoid shortages and backorders. The reason behind the problem could be poor demand forecasting, lack of inventory control of stocked items, and errors in systems or manual methods controlling when and how much to order what products.
While having out-of-stock items means that some shelves and warehouse racks are empty, the irony is that there are billions of dollars wasted each year in excess stock. And most struggle to find an optimized balance between the two costly challenges.
It is not just retail stores that need to worry about properly managing inventory levels and costs. In fact, inventory management processes are found everywhere in the business world. Maintaining inventories is necessary for any company dealing with physical products, including manufacturers, wholesalers, suppliers, distributors and retailers. In US alone the manufacturing and trade inventory on-hand was estimated at $1.812 trillion in June 2015. With that much inventory on-hand, it begs the question, how much of that inventory is excess stock or even obsolete stock?
Most of our customers report having the same issues when it comes to inventory control:
- They experience stockouts of other products, resulting in backorders, lost sales, and dissatisfied customers.
- They have too much of some products which leads to excess inventory which ties up working capital and profitability.
- They have lost track of what is actually in inventory because their legacy applications cannot effectively keep up with growing demand and the speed of business.
- They can’t find material in their warehouse, but they know the material is in the warehouse and warehouse management systems says they have product on hand.
With these common challenges we have developed some strategies that can minimize the re-currence of these issues and create optimized inventory management systems within your organization. We work with different techniques, such as:
- ABC Analysis
- Establishing annual stocking policies
- optimizing the inventory system
- Establishment of Optimized Purchasing Procedures
- stock allocation strategies
- replenishment automation
- Higher vendor managed inventory (VMI)
- Development of Just in Time (JIT) strategies
By implementing our strategies as required, we are able to support our clients to achieve:
- A balance between cost and revenue
- transparency and reliability between our clients and their customers
- reduced lead times
- increase in performance efficiency
- higher profitability
At the outset, we provide a comprehensive assessment of your current inventory management processes and business requirements. Then we work with you to optimize all the components of your inventory operations, including cycle stock, safety stock, pipeline and pre-build inventory. At the end of the day, you achieve optimal inventory levels across all locations, for all products, throughout the supply chain.