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If you are a business owner, you know the importance of having inventory management to ensure the smooth function of your business. Your business must have inventory management to organize your stock throughout the supply chain. This practice helps you bring products to your customers, keep stock levels consistent, and lower the cost of holding inventory.
Unfortunately, many businesses do not have well-established inventory management. Others may have, but they commit the following mistakes:
1. Lack of Training
One common mistake is thinking you save money when you don’t train your employees in inventory management. Inventory systems are challenging to operate, unintuitive, and complex, especially for employees who do not have experience using such systems.
If you have few employees knowing how to operate such systems, the pieces of data on the software easily get lost when handled by untrained employees. Additionally, if they do not know how to repair it when something goes wrong, data can fall through the cracks. Imagine losing all or most of the data regarding your supply chain.
However, you avoid such a scenario when you train your employees on manufacturing inventory management. Do not treat this as a waste of time and money because employees keep your inventory organized and intact if they know how to use the software properly.
2. Unavailable Cloud-Based Inventory Management Platform
Worse is when businesses don’t have cloud-based inventory management systems. This limits access to accurate inventory data, which is vital when making informed and timely decisions. Without real-time data, your chances of losing money are higher. Since inventory is constantly changing, you need to make decisions suitable for the condition of your supply chain.
Another advantage of having a cloud-based inventory management platform is to access needed data anywhere and anytime. This means you don’t have to be in the office to browse physical documents regarding your data, limiting you to work in your office.
Moreover, data is more secure when stored in the cloud because of software providers’ enhanced IT security systems. Thus, you must find a provider with a good reputation for providing a safe system. This means you better protect your suppliers’ and customers’ data.
3. Numerous Storage Sites
It is also an issue if you have too many storage sites, including a reserve, a store, and a warehouse. Having such for the same product is not always an efficient way to improve the level of service of your business, only merely increasing your total merchandise by 10% to 50%.
When you have more merchandise, it means you have more storage coverage since a storage unit typically consists of more than one piece, such as pallet and cardboard. When you have more storage coverage, you also increase your storage points, complicating your inventory management. And in case of shortage, it is difficult to distribute merchandise as you do not have good overview of the total inventory.
The solution for this is to centralize your merchandise. Have one storage site for all your products to make managing easier. Only decentralize merchandise when you have large products or ones with high sales volatility.
4. Lack of Demand Forecasting
Another big problem is not knowing your upcoming, past, and current merchandise levels. This means, you do not have a clear overview of your business performance. On the other hand, when you understand your business’ performance forecast, you can anticipate how much you need to order by knowing how much merchandise is available.
The result of not having a demand forecast negatively affects your employees since they find it challenging to meet customer orders and needs. An even worse outcome is you gain a bad reputation for not being able to provide a good service because of poor inventory management. This is all because you did not monitor and adjust your inventory.
You avoid this when having a demand forecast since you plan how much product you need in the future. It is especially true if you have real-time data about your current and past product performance for better stocking decisions. Most importantly, when you have inventory software that generates reports, you stay on top of inventory levels and product trends that your customers prefer.
Doing business means keeping track and organizing your stocks to keep your business going. When you are understocked, you lose potential customers. On the other hand, overstocking cause losses if your supplies are not in demand. This is why you must avoid the mistakes mentioned in this article to ensure that you make wise inventory management decisions.
The post Top Four Inventory Management Mistakes and How to Avoid Them appeared first on Home Business Magazine.