Good inventory management practices in the firm helps in attaching value in terms of having control over and managing lean inventory. Inventory should be neither small nor large , both these conditions are unacceptable for the company. Certainly, we can define that inventory is not concentrated on management. Lack of knowledge became an uneconomical establishment over years. It happens when a cost reduction drive which takes out the shell of inventory and results in reconstructing the operations.
Firm’s concentrated on inventory as an elementary function and realised that inventory affects sales and profits. They supervise to include changes and improve inventory system processes. There are countless business models still following lean inventory principles. Inventory management totally relied on the chain of supply and its operations.
Inventory management is an operational function. Which is mandatory to follow and maintain operational process in the inventory system. Integrated with operations, it provokes endless study; analysis, decision making to command and supervise inventory management levels.
These few prospects mentioned below lead to have long-run in inventory management:
- Review and revise inventory and stock pattern repeatedly
Inventory is totally reliant on supply chain delivery time and demand aspects. Firm’s accompany one stocking policy for all items. Consider an example containing three different categories which have stocking inventory of 15 days. But that is uncertain and not necessary, while a few items have longer lead-time that affects inventory holding , demand patterns and also hit frequency of previous data will represent dissimilarity for every inventory item.
- Follow detailed inventory planning
Figure out inventory types, certain characteristics of items you are carrying. Create the inventory stocking parameters considering the unique features of specific inventory.
Among your inventory list, you can figure out different types of materials that don’t have the same value. Expensive must be carried in the stock for a longer period, while other items have shorter- leading time and move faster. Very few items are necessary to be separated and concentrated.
Pursuing more details will help you to recognise the inventory- stocking norm necessary to handle these characteristics to make sure optimum efficiency. The solution includes customer service standards and specifies a delivery time based on the frequency of demand. Few items have shell life and they have separate norms and concentration.
- Study and build suitable inventory norms
Firm’s comes under retail segments, deals with numerous inventories in terms of number of parts and value as well. And assure that review practice on inventory list and clean up operations on an existent basis.
Generally known as catalogue management, inventory norms review is organised based on detailed study on sales, data, demand pattern and sales cycles etc. Awareness on business and sales cycles which are particular of the product category helps better inventory management.
Consider an example based on retail garments on season bases SKUs is reduced irrespective with their demand in the previous month. This helps to recognise stocks which are managed by the macro level and also recognises high value and fast moving items which should be always in the area to avoid stock outs.
It doesn’t carry stock standards for all items, including low valued items and high valued items. If local value items are in more numbers whereas, lead- time is less, cut down the inventory and change the buying pattern. Eventually high value items are managed by cutting down delivery lead times and reduced inventory.
It helps to periodically study data and extend the same data to recognise slow moving and outdated items. The dead stocks must be deleted and active catalogue should be obtained.