Businesses of all types & sizes suffer issues with stock control & inventory management. Every business experience variances throughout the operation for a wide variety of reasons, all of which need to be managed in a timely fashion.
Effective management of your inventory will not only help with customer service, it is also critical when considering the bottom line, no one likes unwanted surprises.
These are our top tips and guidelines to effective Inventory management;
- Know your operation. Knowing and appreciating your operational flow in terms of people, materials and finished goods will aid in the preparation of all necessary process’s. This is important not just only for the operation as a whole, but more fundamentally your storage facilities.
- What is your storage solution – is it fit for purpose?. What inventory do you hold, is it palletised, temperature dependant, humidity dependant, degradable, subject to cross contamination, will there be fork trucks, what will be the inbound and out bound flow, people flow, truck flow, etc etc.. Getting your storage area set out ‘effectively’, ‘a place for everything and everything in its place’ will only help when it comes to managing your inventory effectively.
- The system. Depending on your organisation, a spreadsheet or whiteboard may suffice, more often than not, a WH Mgt system will be needed. Make sure it does all that you NEED & and hopefully a lot of what you want. Training of the Team & interface with the team is key to success – user friendly & simplicity is often forgotten.
- Check all inbound stock at point of receipt & point of despatch. The first part of the process is delivery & all deliveries should be checked Vs Orders Vs expectations. Is it the right product? Is it the right quantity? Consider sampling methodologies. Is it the right quality? Classification, Good, Hold, Positive release, Quarantine, Reject etc. Is the packaging correct / fit for purpose? Is the accompanying paperwork correct? Batch Numbers / BBE / UB / Spec correct?
Once product is ‘accepted’ you’re are now financially responsible for it. Having a robust intake / movement/ despatch procedure is a good start to ensuring inventory accuracy.
The same is true for outbound, internal & external.
- Location, location, location. There are many things to consider here, going back to points 1. & 2., you will have an understanding of fast and slow moving products, allergens, organic materials, hazardous materials, similar materials etc. etc.,
Thus you will be able to plan where everything should live. Consider Cheese, Mature Vs Extra Mature with similar product codes, would you put them together where they could easily get confused, thus wrong inventory and valuation?.
Allergens need even more consideration in food establishments, no one wants to hospitalise customers.
Where appropriate a structured and labelled location protocol should also be used to allow for system interrogation.
- Name / Code / Label your inventory clearly. Common sense really, at some point materials / goods will need to be picked / receipted & checked, in the main manually, but sometimes electronically, so materials / goods need to be labelled correctly at the point of receipt into any warehouse / storage facility. Give consideration to coding structures, e.g. Packaging items starting with a ‘P’, organic items on Yellow labels and so on. Visuality can be a great asset to inventory mgt and control. Good practice here again will help inventory accuracy.
- Picking in Rotation / Batch control. Some materials have BBE or UB and or Batch Codes. At point of receipt this needs to be clear and known allowing the operation to use the correct materials in the correct way. It will also allow the operation to clearly identify ‘distressed’ stock, allowing this to be managed.
- Product returns. Seems obvious, but there needs to be a robust process for managing returns, from both internal and external customers, thus being able to maintain inventory integrity.
- Stock levels. Stock levels – need to be consistently challenged, needs vs wants vs price vs space vs operational effectiveness. There is no one size fits all solution to this, but models such as the Wilson EOQ Model, however effective means different things to different organisations and indeed those within an organisation, and thus you need to find solutions that work for you, your business and your constraints / expectations.
- Regular stock reconciliation. Carrying out regular stock reconciliation can be done in a number of separate way, stock take, stock check or PI, or as I would recommend a structured process of stock check & PI.
- KPI & Reporting. A number of key KPI’s, waste, vendor mgt, stock errors, stock accuracy etc., should be used to help manage inventory levels, issues and flows. Would also recommend regular variance analysis to get to & solve root cause issues.
- The one that everyone usually forgets – THE TEAM. The team need to be trained & trusted to follow / utilise & improve the inventory control process at every stage, without them, the above is nigh on useless!
Feel free to contact us at Purely Supply Chain if you would like or need help & advice.