In today’s challenging buying environment you need to understand what your customers needs are and make smart decisions on how to manage them through your inventory. You also need a consistent and complete view into your supply chain to allow for proper business growth based on these customer demands. Companies worldwide are challenged with finding the best way to manage inventory at the most efficient and profitable way. But why, in this digital age, are customers faced with what seems like rudimentary IT challenges?
Inventory Management is a lot more complex than it may seem to most. Let’s look at some of the biggest challenges distribution centers face when it comes to inventory management:
- Knowing Your Inventory – According to IBM, 79% of supply chain officers report that lack of visibility has a significant impact on supply chains. To start, companies should take a holistic view into knowing both core vs. non-core items and when they should be ordered. Core items are those that you sell year round and need continuous replenishing of stock. By separating these out from non-core (or seasonal) items inventory levels can be much more aligned with an established schedule and product lifecycle. However, knowing WHAT your items are is just the first step. You must then understand, at all times, what is in stock, what is going to be ordered, the size (both quantity and shape) of that order, and what needs to be replenished. Knowing your inventory can be a very cumbersome task but critical to ensure profitable business operations.
- Inefficient Processes – Many inventory management systems are built on or rely on dated software or manual processes. This creates an incredibly challenging work environment for anyone involved in the inventory management process. Start by taking a view into your current standard operating procedures and determine where gaps may lie in your systems.
- Customer Demand – Customers needs are changing daily and they are looking to their distributors to allow for flexibility in orders. With the growing demand of competition it becomes more challenging to keep up with the unique needs of your customers to assure they do not have those needs met by someone else. It is up to your company to understand your customer needs and assure those demands are met while still managing your Inventory to appropriately keep up with those needs.
Effective inventory management is critical to the profitability and growth of your business. Comment below if you have any additional tips or challenges you would like to share!