Among all business processes carried out by organizations dealing in physical products, inventory management happens to be the most overlooked activity in the beginning. This can be devastating for your business’s financial health, and a lot of companies approach consultants for issues like warehouse quality control after realizing that their bottom line is taking a hit due to poor management. Suppose you are facing similar troubles or intended to fortify your business against any foreseeable search issues. In that case, you are at the right place since we will discuss the top five common inventory management mistakes that you need to avoid right away.
Not Mapping Your Inventory
Mapping your way entry is of paramount importance since it is the only way you can efficiently manage it. In the initial days, owners usually manage their inventory on an inclusive basis and make more efforts to create SKUs and Bill Of Material (BOM) for their stock. As the number of items stored and their quantity increases, it becomes tough to track your inventory manually.
You cannot rely on your memory or spreadsheets to record and manage various inventory-related data for accounting and operational purposes. The chances are that you might lose track of your stock and make wrong decisions, such as using the fresh inventory while keeping the old one sitting in your storage facility. Is therefore necessary that you map your entire inventory to enable proper database management for the same.
Not Having A Clear Idea Of Performance Management For Your Warehouse
Performance management is extremely important when it comes to inventory and warehouse management. This includes how your workers interact with their surroundings and conduct different processes such as stocking, inventory cycle counts, and order picking. Keeping a tab at the time taken and accuracy levels is instrumental to warehousing operation success.
In the absence of such data, you are left in the dark regarding how the processes will be carried out, efficiency levels, the number of workers needed, leading to an overall blackout when it comes to capacity estimation and manpower planning.
Not Paying Attention To Inventory Management Metrics
Ask any successful manufacturer or ecommerce retailer; the technicalities involved in inventory management are among their most important success factors. Understanding even the basic metrics like inventory turnover ratio and ABC analysis can help you improve your overall profitability to a great extent.
If you do not pay heed to such matrices, it becomes impossible for you to analyze how to properly run your warehousing facility. In such cases, you might not be aware of the left and other damages to the stored goods, which would ultimately lower your sustainability. Inventory metrics also provide you insights into the product-wise financial impacts, and hence, not tracking them is clearly a blunder that you cannot even track accounts of.
Neglecting The Importance Of Sales Forecasting
Among all mistakes, the most vulnerable aspect that can leave you is not paying enough attention or completely ignoring sales forecasting. It isn’t possible to lay down interactive sales forecasting models without proper data and tools (BI and Analytics), which in turn, breeds a lack of insight regarding which products to order, in what quantity, if the number of items per package needs to be changed, any special handling instructions that need to be followed.
The requirement for all aspects cannot be gauged since they use the information for multiple touchpoints, and their contribution towards your operations continues to evolve with your organization. Therefore, sales forecasting is a very important application of internally and externally sourced insights that help to make inventory management decisions.
Not Using A WMS Inventory Management App
Having a WMS inventory management app is arguably the solution to all the issues discussed above. It allows you to record, track, and manage your entire inventory, analyze trends, integrate accounting, manufacturing, and sales functions for visibility across different verticals.
It helps to stay on the same page even in cases like utilizing buffer stock, packaging issues, storage condition monitoring, and MRO (maintenance, repair, and operations concerned with warehousing.) If you are trying to execute all of these inventory management-related tasks using spreadsheets, you are bound to witness troubles arising out of inaccuracy, work duplication, and lack of real-time visibility.
Towards the end, we must highlight the importance of thorough visibility, access to insights at various levels, and transparency in terms of decision-making factors. The mistakes made in inventory management usually hinder these aspects, translating to greater complications at different levels. If you are facing any such troubles or need additional guidance, feel free to contact PL Solutions and get experts at your side.