Gone are the days when manufacturers could stockpile vast amounts of raw materials, pile work-in-process on the shop floor, and stockpile finished products in warehouses. The old methods are now producing inconsistent results, not to mention long lead times and high costs. The trend is for companies to respond rapidly to consumers’ demands while maintaining a low inventory level.
The majority of companies aim for a high inventory (or stock) turnover rate. So, if you find your inventory turnover ratio to be poor relative to your rivals, this blog would help you find out what’s going on.
Use inventory management tools from an ERP system
Small businesses often start their inventory management with spreadsheets. They can upgrade to a simple inventory management software when the business expands, allowing for better ordering and monitoring of goods. Switching to an ERP inventory management will also take you a long way, enabling you to handle the supply chain and order-to-cash processes in a single system.
If you’re a small and medium retailer, install a barcode scanning system to process the incoming inventory level and data from cash registers and point-of-sale systems.
In case you’re moving thousands of orders per day, the Radio Frequency Systems (RFIDs), ensures efficiency by automating warehouse control from start to finish.
Improve the efficiency of the inventory management system by automating
Manual inventory control is no longer efficient. This is because human is always prone to error which might lead to disgruntled customers and possibly lost revenue. In addition, manual operation is often time-consuming and a waste of valuable human resources.
This demanding job can be handled much more accurately and efficiently with the correct inventory ERP method. Inventory levels are monitored and updated in real-time since all related buying and sales order data is in the same system. Hence if a customer calls to ask if a product is in stock, you can quickly respond with a check.
Use data analytics to improve inventory management
With real-time inventory data and analytics at your fingertips, you can generate reliable product and revenue forecasts in seconds. You can use this information to forecast consumer demand and adjust your inventory accordingly. There are many advantages of predictive data analytics, including:
- Reducing inventory expenditure to increase cash flow
- Providing more accurate product availability to improve customer service
- Predicting the appropriate inventory level to meet demand
- Limiting discounting or scrapping of old stock to increase profit margins
You will market your company more efficiently to particular consumer groups if you have reliable revenue forecasts. This can be accomplished by a tailored advertisement campaign. The tactic guarantees that the right people are aware of your company at the right time.
Another advantage is the originality of your data analytics. This ensures you can fine-tune your plan for each campaign you run and evolve your design at each point. It also ascertains your available inventory meets your customer base’s demand.