Over the years, managing inventory has presented us with a broad variety of hurdles, and we've experienced just about every issue imaginable, in addition to some successes. Despite all of these difficulties, we've also had some achievements along the way (although far less frequently).
It is likely that you are able to comprehend how, as they proceeded with the expansion of their company, the gap that existed between the company's actual inventory and the bookkeeping that was done accurately widened and got more evident. As a result of this, they were unable to analyse and plan, and they came perilously close to failing when the marketing team made a strong push to clear out inventory on the books... that they didn't even have in stock. Because of this, they were unable to analyse and plan, and as a result, they came perilously close to failing. Because of this, they were unable to do analysis and plan effectively.
The following is a list of all ten of the things that they found:
Avoid using spreadsheets if you can
Spreadsheets can get erased. They are able to have the items inside the cell removed from it. It is possible to delete entire rows of data as well as entire columns of data. It is easy to make a mistake when working with a formula. Although I am well aware that it is theoretically feasible to protect cells, I have seen very little evidence that this is ever actually done. People are notoriously bad about keeping the spreadsheets they use up to date. In addition to that, the next thing you will need to do is create a strategy for importing that data into the accounting software that you make use of.
Give your goods distinct names
Make it straightforward for your workers to choose what to include on customers’ orders, and make it simple for customers to buy products from you through your website. It is EXTREMELY simple for people to select the incorrect item when they use the part numbers provided by the manufacturer or any other internal component number. This makes it extremely easy for them to make a mistake. Example: CYO523008 or CYO523016? I have no idea. It may be more accurate to refer to this product as the “Crayola Crayons Set of 8” or the “Crayola Crayons Set of 16.” This makes everything a TON easier, and if it’s okay with you, I’d want to have the number 16 if it’s still available.
Keep your storage facility organised
How can your staff fulfil customer requests if they can’t locate anything? How exactly do you count things? A cluttered warehouse sends the message to members of the team that they do not need to be held accountable, can lead to a number of safety concerns, and can cost you money simply because it will not function efficiently.
Ensure that all locations and goods in the warehouse are correctly labelled, that the aisles are kept clear of clutter, and that your crew is fully aware of what is required of them to maintain a clean and well-organized warehouse.
Use purchase orders wherever possible (PO)
Over the course of my career, I’ve worked with a large number of clients that have used their employees to place phone orders with a variety of vendors. For the clients that we provide counselling for, this particular area of disagreement is completely non-negotiable. Each order for inventory has to be recorded into your inventory management system using a purchase order, then faxed or emailed to the vendor, and finally sent to members of your team who are responsible for receiving the goods. This will generate a paper trail for your company and guarantee that there is no uncertainty for the supplier on what has been bought when delivery is expected, how much the estimated expenses will be, and the payment terms.
A significant number of our general contractors also make use of purchase orders for the services that are subcontracted. This enables them to verify that any bills for labour subcontractors are in accordance with the project’s specifications and costs.
Delivery and POs should be compared
If your company uses purchase orders (POs), you need to ensure that your receiving staff has access to them so that when the inventory is delivered, they can double check the figures to ensure that they are accurate. Make sure that each delivery is counted, and that a member of the team provides notes if the totals that were delivered do not match those that were recorded on the packing slip or the purchase order.
Decide on minimum stock levels
The majority of inventory applications provide you the option to configure reorder points or minimum stock levels. This guarantees that you will never experience a shortage of popular goods or essential components that are required for assembly or manufacture. In SOS Inventory, two of my favourite choices are being able to automatically calculate reorder points based on previous data as well as creating an alert for when inventory levels become too low.
Make routine checks
You need to make sure that the counting of the inventory is a regular part of your schedule. When people check in deliveries and record amounts, mistakes are made, and every once in a while, things give the appearance of growing legs and wandering out on their own. If you are on top of the inventory levels, you won’t have to worry about the issues that arise when you don’t have enough of anything to fulfil an order or finish a building project. You can avoid these complications by staying on top of the inventory levels.
You can choose to conduct a thorough physical inventory (counting all of the inventory at the end of the month). Cycle counting is a task that could be planned (and will depend on tiny parts or groups of inventory on a particular day). The customer I mentioned at the beginning of this post elected to perform both surface area cycle counts (completing one part at the end of each day in their four-aisle warehouse every week) and one significant physical inventory at the end of their fiscal year.
Process documentation and task inclusion in job descriptions
Create a process document for all of the actions in the warehouse. There is no room for confusion regarding who is in charge of what follows next when you describe each activity involved in a workflow (for example, purchasing/receiving, sales/fulfilment, and warehouse maintenance/stock status) and include these duties in the job descriptions of team members.
Include backup and contingency plans for issues that could shut down your firm, like a late delivery, an unforeseen cash flow problem, a sales surge that results in client backorders, or a staffing shortage during a busy season. These are but a few instances of potential issues.
Restriction of inventory access
This is true for the actual inventory and the inventory management applications and accounting software you use. You may reduce the danger of fraud and the number of employees who can make mistakes if you limit access to certain information and establish clear divisions between different types of tasks. You will be able to ensure that every team member receives the appropriate training on workflow and the tasks for which they are accountable if you set access permissions. Because of this, it will be much simpler for you to manage inventories and the system you administer, determine when modifications should be made, and put those changes into effect when they are required.
Analyse what is in demand and who is purchasing it
It is critical to be able to recognise patterns in customer purchases, just as it is necessary to be aware of when supply levels are growing dangerously low. After implementing a new accounting system that gave them the ability to track what was selling, when it was selling, and to whom it was selling, this company saw a significant increase in sales, which caused their sales to rise. They took initiative in stocking items that were more in demand throughout specific times of the year and stocked up accordingly. They were able to identify busy times of the year in order to hire and train temporary personnel in advance of the start of the busy season.
They enjoyed the fact that they were able to perform market research and focus their marketing efforts on clients who had previously purchased specific products. This was the element that they found to be the most useful. This was achieved by conducting sales on older goods in order to lower the amount of stock that was on hand and to investigate whether or not there was demand and interest for a potential new offering.
It’s possible that all of this seems daunting, but please keep in mind that you don’t have to do everything at once. Before we ever began the process of converting this customer’s inventory to QBO and SOS Inventory, we had them complete some work for this client, during which they organised their warehouse and gave items names that were easier to grasp. After that, we began consulting with them on their existing workflow, job descriptions, and the areas in which they were experiencing the most difficulty. Finding someone who can assist you in dividing all of this into several parts and developing a project timetable to complete each step is something you should look into doing as soon as possible.
Over several decades, the fundamentals of designing a supply chain have remained mostly unchanged. The goal here is to have the appropriate product in the possession of the customer in the shortest amount of time feasible. While doing this, you should check to ensure that stock-outs and any other inventory-related problems do not develop. The officials in charge of inventory management have always had the goal of streamlining this process in mind, and they have made significant progress in that direction.
However, in more recent times, automation has grown more popular as a means of increasing both the efficiency of the supply chain and its visibility. Warehousing, inventory receiving, procurement, stocktaking, and order fulfilment are some examples of industries where automation is currently in use.
Even if the total lead time has been cut down since these separate procedures have been automated, there is still room for improvement in the amount of time required to link them together. In a similar vein, there is also the problem of individuals working in separate departments being unable to communicate effectively with one another. It has the potential to cut even more into the time saved by automation in the aforementioned areas.
The pace at which firms automate their processes is somewhat modest for a number of different reasons. In spite of its many advantages, inventory managers may be preoccupied with other day-to-day activities and issues, making it difficult for them to give adequate consideration to automation. To their good fortune, however, automation can free them from the need to perform a significant portion of those chores in the first place. How exactly does automation facilitate and improve the process of inventory management? Here are the top six explanations.
The automation of inventory management can have direct as well as indirect positive effects on the overall efficiency of your firm. Manual data input and tracking are two operations that require a significant amount of time and are expensive and fairly difficult. By automating these procedures, you will guarantee that they are carried out effectively and give your workers the opportunity to focus their attention on other matters relating to the business.
The size of an organization’s inventory system and the scope of its operations will increase and get more complicated as the business develops and expands. Automation has the potential to alleviate any future problems that may be caused by this increase and will help ensure a seamless transition.
The presence of human mistakes is inevitable in any process, and it is something that we have had to learn to live with for a very long time. However, the human role is eliminated thanks to automation, which also removes any element of uncertainty from the process. For instance, scanners and point-of-sale (POS) systems are capable of producing data in real-time, directly from the source. If you use other systems that can produce orders based on predetermined parameters, you can help guarantee that your data is always up to date and reduce the amount of human error that occurs.
When you are thinking about automating your inventory management, you need to deploy an integrated system. It is the most effective method for ensuring that communication and collaboration across departments will not become an issue or that an existing problem will not get worse.
Unquestionably, the most significant benefit that automation brings to the table in this situation is an expanded visibility of your inventory that is updated in real-time. You will never fall behind, and you will be aware of the goods that are currently in stock in your store. Not only will you be able to run the business more efficiently and effectively, but you will also be able to develop the necessary management reports required to monitor your organisation’s operation.
In the event that an unexpected condition arises, automation can also assist you in mitigating any negative impacts. For example, a supplier could run out of inventory; in this scenario, your automated system will locate other prospective suppliers who might be able to fulfil the order. It will assist in reducing the lead time and take a more streamlined approach to the management of the inventory.
In a nutshell, automating your inventory management may assist you in reducing the amount of time spent on day-to-day operations and increasing your lead time.
There is not the slightest bit of uncertainty about the fact that automation is the way of the future in terms of conducting business. Cloud computing has made it feasible for businesses to integrate programmes that were kept separate, such as email and customer relationship management (CRM), which was almost unthinkable only a few short years ago.
Because of this straightforward yet brilliant innovation, managers can now make greater sense of their businesses and the data flowing in. Because of this, better decisions can be made, enhanced communication and cooperation can occur, and operational efficiency may improve overall.
Although it might not appear that way at first glance, smaller firms really hold a considerable competitive edge over their bigger rivals. Because their operations are less significant, or perhaps because they are still in the beginning phases of development (as is the case with start-ups), it will be much simpler to integrate and deploy automation into their processes. After it has been implemented, automation is simple to scale up, which guarantees that there will be no downtime or other interruptions in business operations.
It is possible to incorporate automation in pretty much every functional area of the business, which is another advantage of this technology. You may accomplish this goal at any level of your organisation, given that most of these domains contain work processes that can be automated.
Here are seven compelling arguments for why you should automate some processes in your small business:
The straightforward response to this enquiry is that automation is the way of the future. It does not imply that putting it into practice will not be fraught with its unique set of difficulties. It’s possible that management is delaying action simply because they are focused on more important things at the moment. And even if they do decide to implement the change, it’s possible that the workers will be opposed to it.
If you do decide to introduce automation into your operations, do it gradually. Choose a strategy that will ensure a high return on investment (ROI), and then use that approach as a model for the rest of your organisation when it comes time to automate other processes.
The enhanced productivity of staff members is one of the benefits that will become obvious almost immediately. As a result of the elimination of the requirement for your personnel to manually complete a significant number of monotonous and low-value jobs, they will have more time available to devote to other endeavours. In a similar vein, managers will also be able to make better use of the resources at their disposal. As a direct consequence of this, they are better able to concentrate their efforts on finding solutions to problems and improving integration.
Automation processes have a lot to offer marketers, including, but not limited to, data enrichment, lead scoring, and customer monitoring, to mention just a few of the many potential benefits. Automation enables marketers to improve the planning, coordination, measurement, and management of all marketing campaign components, regardless of whether the campaign is conducted online or offline.
Many accounting-related duties, like the production of invoices, basic reporting, checking for payments, and issuing reminders, will no longer be a problem for your staff after you have automated these processes.
Your leads will always be sent to the appropriate personnel to convert the conversion into paying clients if you streamline your sales procedures, such as your sales data management, customer relationship management system, and follow-ups.
Because many manual procedures are going to be replaced with automated ones, there will be a huge reduction in the amount of human error that often comes along with them.
By offering pre-programmed replies, automation may readily find a place for itself in the realm of communication. This implies that receivers will no longer be required to ask for status reports, and the members of your team will be able to concentrate their efforts more fully on other areas.
Even if the list provided here is not complete, it offers a clear image of how much of a difference automation can make to a business, particularly a small firm that may live on efficiency.
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