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Inventory Management Strategies: 5 Tips That Can Save You Thousands

Inventory Management Strategies: 5 Tips That Can Save You Thousands

Inventory Management Strategies resized 600As ERP consultants that have worked with hundreds of ERP software clients over the last 20 years, we see countless examples how an ERP system can help with your Inventory Management.  Is Inventory management your weakest link?   ERP systems have traditionally included tools for controlling your inventory and thus controlling the costs attributed to it.  Did you know that the 80/20 rules also applies to your inventory?  You will get the biggest return on investment by the control of only 20% in your inventory.

In order to have a top inventory management program you will need to have management’s commitment to the project as well as an understanding of best practices with easy-to-follow policies and procedures.  We all know inventory is a liability and can tie up thousands of dollars of your cash flow.  The most successful companies are those that make a commitment to manage inventory effectively and efficiently which only makes good sense.   We hope you find these tips useful if you are looking for ways to get better control of your inventory with an Inventory Management strategy.

Here are 5 tips to help save you thousands with setting up an Inventory Management strategy:

1)  Know what is in your Warehouse then put some policies in place.
  • Deal with Safety Stock
  • Set Up Account Structures
  • Manage Excess & Obsolete Inventory
  • Deal with a Physical Inventory
  • Set Up Item & Inventory Status Codes
  • Define Location Parameters for Control
  • Implement & Manage Cycle Count Programs
  • Set Up and Manage Scrap & Recycle Materials
  • Set Up and Manage Work Center Stock Locations
  • Use Lot Control for Enhanced Accuracy & Control
  • Set Up and Manage Consignment Inventory Locations
  • Manage the Interface with Purchasing and Manufacturing though an ERP system.
2)  Reasons to Hold Inventory
  • Independent demand, forecasting, and
  • Source of supply are flaky
  • Need to:
  • Support high service levels
  • Level production in seasonal markets
  • Service parts requirements
  • Price hedging
3)  Reasons NOT to Hold Inventory
  • Takes cash out of the bank
  • Warehouses cost money
  • Need people to:
  • Stock, issue, and move it
         • Sits around and becomes:
  • Obsolete, unusable, lost
  • Someone will want you to count it
4)  So, you’re going to hold inventory?
  • Make absolutely sure you know at all times:
  • What and how much you have on hand
  • Where it is (all the places it is)
  • Value of what you have on hand
  • By type and status
  • Status of everything you have on hand
  •     Why were you holding:
  •     Obsolete items?
  •     Expired items?
  •     Rejected items?
5)  Your ERP system can help you automate perpetual inventory techniques
  • Booking inventory receipt for each thing we buy as
  • it is  put it away
  • Book both count of items and their cost
  • For most of us the system is remembering the cost
  • Book every issue as we take things out of inventory
  • Yields a system, usually computerized, that knows both the count and value of everything on hand at all times
  • Book adjustments as we recognize the need for them

Most ERP users can improve their return on investment (ROI) with no further capital investment.  Have you looked at an ERP system lately with good technical tools?  You may find that scheduling demonstrations to review a few ERP systems are a good way to see what is on the market.  CONTACT US and book one with us today

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