Businesses in the supply chain may already have heard of inventory optimization and implemented inventory management practices.
But, what is Inventory optimization?
Inventory optimization is a system used to source, store, and sell any inventory. This includes both the raw materials (components) and the finished goods (products).
This allows a business to ensure they always have the right amount of stock, at the right level, in the right place at the right time. Also making sure the product is at the correct cost and price.
Why is inventory management important?
There has been a surge in companies taking their business online and a good inventory management system can not be emphasized enough.
Can you imagine trying to run your business, not knowing how many products you have on hand, or trying to complete a sale not knowing the correct price? Not to mention trying to arrange delivery without knowing where all your stock is. Without this information at your fingertips, you could very likely lose a customer to your competitor.
What does an inventory system do?
Because a good inventory management system provides high visibility of all items in multiple locations if necessary your business is able to :
- Prevent stock being sold out
- Allow for an ample lead time to replenish stock
- Show you the value attached to your stock at any time.
For many businesses, their greatest expense is physical inventory.
This often determines the difference between the success and failure of the business.
How do you know if you need a new inventory system?
To see if your current inventory system is adequate or if you should upgrade to a system that simplifies the inventory process by automating it from start to finish, as yourself the following questions :
- Do numerous staff touch the inventory from the time it arrives until the time it is sold?
- Are the inventory process and procedures until a sale is concluded loosely defined and poorly enforced?
- Do you wait to discover which inventory is running low or out of stock before re-ordering?
- Is your inventory stock loosely estimated based on routine manual counts?
- Are you entering data several times from receiving stocks to final sales on different systems in order to keep track of inventory movement?
- Does packing an order require staff to hunt for inventory in various places?
- Is your inventory system paper-based or within a spreadsheet?
If you answered yes to one or more of these it may be time to look for a more efficient MRO inventory optimization system.
Benefits of an MRO inventory management system
There are many benefits to an efficient MRO Inventory Management system, the most obvious being reducing costs as mentioned above.
But using an inventory management system will also :
- Increase the value of your business, as you will have a more efficiently run company with lower losses and reduced costs.
- Increase your profile as your storage is used wisely, staff are completing a job once, productions are more efficient, you are able to replenish the correct amount of stock at the correct time and account for stock without costly stock takes.
- Enforce employee compliance by notifying you of lower prices offered by your contracted suppliers.
- Ensure price auditing. Suppliers can change the price of items at any time and regular auditing allows you to ensure that the price reflected is the one you negotiated on.