The Importance Of A Balanced Inventory Management System
Ordering enough inventory to meet customer demand has always been a tricky balance. During slow seasons, you have to worry about different ordering patterns and costs. On the flip side, not having enough stock during a busy week could lead to backorders and frustrated customers.
Types of Inventory Control Methods
Firstly, balancing inventory levels depends on the type of control system that is adopted. This means either a push inventory or pull inventory. Push inventory management assumes ordering products based on forecasted customer demand. With pull inventory, the goal is to keep inventory levels as low as possible and the system begins with the customer’s order.
Accuracy Is Vital for Balanced Control
Even with efficient techniques to manage inventory, an inaccurate product count can cause each of these methods to fail. You could lose raw materials when it is not placed on the correct shelves or in the right zones. This could lead to disruption of the manufacturing process if materials are misplaced. This could also create issues further along the supply chain.
Manually evaluating inventory accuracy could still lead to issues. Inventory numbers may not be entered correctly in warehouse computer systems and missed sales could occur. This can cause inventory numbers to fluctuate or show that there are no products available. Waste of capital and an increase in carrying costs could occur as a result. Not to mention that manual data entry wastes the employees’ time when there are sales that need to be relocated.
With new warehouse innovations entering the world of retail, many companies are turning to a management system and automated systems to balance their inventory. Warehouse operation optimizations can save 20 to 50% on warehousing costs. These solutions also allow for more accurate processes, such as using real-time data tools.
Building a balanced inventory system for proper inventory management is critical to meet customer demand and streamline warehouse operations. Evaluating your supply chain, adopting the right inventory planning method, and establishing the proper tools should allow you to successfully stock and deliver products for current and potential customers.
Infographic created by WSI, an eCommerce fullfillment provider