In today’s competitive – not to mention volatile – marketplace, businesses that can effectively manage their inventory will be well-positioned for success. By keeping track of what you have in stock and anticipating demand, you can ensure that you always have the supplies you need on hand while avoiding the costs associated with overstocking or understocking. Therefore, achieving better control over your inventory management should be a top priority for any business owner as we move out of the pandemic.
1) (Cautiously) Use The Just In Time (JIT) Strategy
JIT was taboo during the pandemic because of its dependence on extended and inherently weak supply chains. Memories are short, however, and in 2022 Just in Time strategies are making a strong comeback as global supply chains stabilise, even if the trend is now coupled with a continued drive towards re-shoring for essential supplies. When it works as expected, JIT is a system in which materials are delivered or resources are used only as needed, and waste is eliminated. This ‘lean’ approach can be applied to all aspects of business, from manufacturing to accounting. In terms of inventory management, JIT means that inventory is only ordered when it’s needed to meet customer demand. This helps avoid costly storage space and reduces the risk of inventory becoming outdated or obsolete. It does, however, depend on fluid global trade which, as the past two years have shown us, is extremely vulnerable to pandemics, wars, and political events (e.g. Brexit, trade wars etc).
2) Implement a Modular Business Planning Package
To ensure that your business can effectively manage inventory levels and minimise forecasting errors, it’s essential to take a comprehensive and unified approach to business planning. This includes having a system in place that can optimise inventory levels in line with demand, supply, and stock control – not just in your direct facilities, but also across your supply chain. Reflex Planning provides such a solution by offering businesses of all sizes a centralised system to manage all aspects of their inventory. Such planning and forecasting tools will save you valuable time and resources and ultimately help improve your bottom line.
3) Understand Your Supply Chain
Understanding your supply chain and the partner businesses that serve it gives you visibility and insight into every link in the chain. This means knowing where your inventory is coming from, how it’s being transported and where it’s being stored. It also means that you can identify bottlenecks, operational risks, and sources of waste, and take steps to improve efficiency and quality. In addition, by understanding your supply chain, you can develop better relationships with key suppliers and customers, which can lead to better deals and improved communication.
4) Pay Attention To The 80/20 Rule
The 80/20 Rule is a business principle that states that 80% of your sales come from 20% of your customers. This simple concept can be applied to inventory management. By focusing on the 20% of products that generate the most sales, businesses can more effectively manage their inventory, forecast product demand, and avoid overstocking or understocking. In addition, the 80/20 Rule can help companies identify slow-moving items and either sell them at a discount or remove them from inventory altogether.
5) Analyse Market Trends and Business Patterns
By identifying patterns in customer demand, you can forecast future sales more accurately and adjust your stock levels accordingly. This will help you avoid stock-outs that can lead to lost sales and dissatisfied customers, while also reducing the amount of money tied up in inventory.
Achieve Tighter Control Over Your Inventory With Reflex Planning
Forecasting and inventory management are essential components for businesses that operate within a supply chain. Still, it can be difficult to control all the moving parts without specialist software. If you’re looking to improve your inventory management, Reflex Planning can help. Our business planning software is designed to streamline the process, save you time and money, and minimise errors. To learn more, call us today for a free product demo.
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