Over the years we’ve seen just about everything that could go wrong – and right (just not as often) – with managing inventory.
As you can imagine, as they started to grow, the gap between accurate inventory and accurate bookkeeping was ever-widening. This meant that they were unable to analyse and plan, and they almost crashed and burned when the marketing team made a big push to clear out inventory on the books … that they didn’t even have in stock.
Here are the ten things they learned:
Spreadsheets can get deleted. They can have cell contents deleted. Entire rows and/or columns can get deleted. Formulas can get screwed up. Yes, yes, I know you can protect cells, but that rarely happens. People forget to update spreadsheets. Plus, then you have figure out a way to move that information into your accounting program.
Make it easy for your team to choose what to put on orders, or for people to buy online from you. Using manufacturer part numbers, or some internal part number makes it REALLY easy for people to choose the wrong item. Example: CYO523008 or CYO523016? I have no idea. How about “Crayola Crayons Set of 8” or “Crayola Crayons Set of 16”? SO much easier, and I’ll take the 16 please and thank you!
If your team can’t find anything, how can they fill orders? How can you do a count? A messy warehouse shows team members they don’t need to be held accountable, can create many safety issues, and cost you money simply because it’s inefficient.
Keep locations and items clearly labelled, aisles free of clutter, and make sure your team knows exactly what is expected of them to keep the warehouse clean and organised.
I’ve had many, many clients have employees over the years place phone orders with vendors. This is 100 per cent unacceptable for clients with whom we consult. Every inventory order needs to be entered in your inventory management app, via a purchase order, faxed or emailed to the vendor, and then provided to team members who are responsible for receiving. This creates a paper trail for your business and ensures there is no confusion for the vendor about what has been ordered when delivery is expected, what estimated costs would be, and the payment terms.
Many of our general contractors use POs for subcontracted services as well, as this allows them to verify any invoices for labour subs against scope and cost.
If your business sends POs, then make sure your receiving team has access to them so that when inventory is delivered, they can verify that the numbers are correct. Ensure each delivery is counted and a team member provides notes if the delivered quantities differ from the packing slip and/or PO.
Most inventory apps allow you to set minimum stock levels or reorder points. This ensures that you never run out of popular items or critical components needed for assembly/manufacturing. Two of my favourite options in SOS Inventory are calculating reorder points automatically based on historical data and setting an alert for low inventory.
You should do inventory counts on a regular schedule. People make mistakes when checking deliveries in and entering quantities, and sometimes items just seem to grow legs and walk away. Staying on top of the inventory levels will eliminate the problems that arise from not having enough of something to fulfil an order or complete a build.
You can either do a complete physical inventory (counting all of the inventory at the end of the month). You can schedule cycle counting (depending on small sections/groups of inventory on a specific day). At the beginning of this article, the client that I mentioned chose to do both: surface area cycle counts (one aisle in their four aisle warehouse per week, doing one section at the end of each day) and one large physical inventory at the end of their fiscal year.
Document the workflow for all warehouse activities. By documenting each task in a workflow (i.e. purchase/receiving, sales/fulfilment and warehouse maintenance/stock status), and including these tasks in team member job descriptions, there is no question about what comes next is responsible for them.
Include backup and contingency plans for problems that can bring your business to a
Standstill, such as delivery not made on-time, an unexpected cash flow issue, a spike in sales that creates backorders for customers or being short-staffed during a busy season.
This applies to both physical inventory and within your accounting and inventory management programs. By reducing access and creating a separation of duties, you’re reducing, at worst, the risk of fraud and, at best, the number of people that can make errors. By establishing access rights, you can make sure each team member is trained properly on workflow and the tasks for which they are responsible. This will make it much easier to manage inventory and the system you manage, identify when changes should be made, and implement those changes when needed.
It’s important to know when stock levels are getting low, but it’s also essential to be able to identify sales trends. Once this company was up and running with an accounting system that tracked what was selling, when it was selling and whom they were selling, sales went through the roof. They were proactive about stocking items that were more popular during certain times of the year and identify busy times during the year to get temp help hired and trained BEFORE it hit.
What they loved the most was that it enabled them to do some target marketing to customers that had purchased specific items in the past by offering sales on some older stock to clear out inventory and do some market research to determine whether there was a need and want for a new product they were considering.
All of this might seem overwhelming, but please remember: not all of this has to be done at once. We had them do some work with this client before we even started our conversion to QBO and SOS Inventory setup – they got their warehouse organised and more understandable item names in place. Then, we started working with them on current workflow and job descriptions, and where the pain points were for them. I would recommend finding someone who can help you break all of this up into different phases and create a project timeline to complete each phase.
The basics of supply chain planning have remained steadfast throughout the decades. The idea is to get the right product into the hands of the consumer as fast as possible. While doing so, make sure that stock-outs, or other inventory-related issues, do not become a reality. Streamlining this process has always been on inventory management leaders’ minds, and they’ve done a pretty good job in getting it.
However, in more recent times, automation has become more popular to increase both the efficiency and the visibility of the supply chain. Some areas where automation is already implemented include warehousing, inventory receipt, procurement, stocktaking and order fulfilment.
While the overall lead time has been reduced thanks to the automation of these individual processes, the time needed to link them can still be improved. Likewise, there is also the issue of people in different departments failing to communicate effectively. It can further reduce the time gained by automation in the areas above.
For various reasons, businesses are somewhat slow in their automation efforts. Despite the many benefits it offers, inventory managers may be too busy with other day-to-day tasks and concerns to give sufficient thought to automation. Luckily for them, however, it is the automation that can take away many of those tasks in the first place. So, how does automation streamline and optimise inventory management? Here are six reasons.
Inventory management automation can have both direct and indirect benefits to your company’s overall efficiency. Manual data entry and tracking are two time-consuming processes, and also costly and somewhat complicated. Automating these processes will ensure that they are completed efficiently and allow your staff the time to redirect their attention to other business-related activities.
As a company grows and expands, its inventory system will also increase and become more complex. Automation can mitigate any future issues that may arise from this growth and ill ensure a smooth transition.
Human error is a natural part of every operation and is something that we had to cope with for a very long time. But, with automation, the human factor is reduced, eliminating any guesswork in the process. Scanners and POS systems, for example, can produce real-time data, directly from the source. Other systems can generate orders based on preset metrics, helping you ensure that data is always current and that human error is kept at a minimum.
When considering automating inventory management, you must implement an integrated solution. It’s the best way to guarantee that interdepartmental communication and collaboration will not become a problem, or aggravate an already-existing one.
Undoubtedly, the best benefit that automation brings to the table here is the increased and real-time visibility of your inventory. You will always be on top of things, and you will still know what items you have in stock. Not only can you operate the business better and smoother, but it also helps you produce the necessary management reports required to oversee your business performance.
Automation can also help you manage any adverse effects, in case of an unforeseen circumstance. For instance, a supplier may run out of inventory, in which case your automated system would identify other potential suppliers that could fulfil the order. It will help smooth out the lead time and adopt a leaner approach to inventory management.
In short, inventory management automation can help you streamline the day-to-day operations and increase your lead time.
It is without a shadow of a doubt that automation is the future of doing business. Cloud technology has made it possible for companies to bring together previously separate applications, such as email and CRM, all but impossible no more than a decade ago.
This simple, yet ingenious invention now allows managers to make better sense of their business and data coming in. It allows for better decision-making, increased communication, and collaboration, and higher operational efficiency overall.
Even though it might not seem like it, small businesses have a significant advantage compared to their larger counterparts. Since their operation is more minor, or even in the early stages of development – as is the case with start-ups – automation will be much easier to integrate and implement. Once in place, automation is easily scalable, ensuring that there will not be any downtime or breakdown in operations.
Equally beneficial is the fact that automation can be implemented in pretty much any functional area of the operation. Since most of these areas have work processes that can be automated, you can achieve it at any level of your organisation.
Here are seven reasons why you need to implement automation in your small business:
The simple answer to this question is that automation is the future. It doesn’t mean that implementing it will not come without its series of challenges. Management could be putting it off just because they have other pressing issues in mind. And, even when they decide to do it, the employees may be resistant to the change.
If you do decide to implement automation into your processes, do so gradually. Pick a method that will guarantee a high ROI and let it lead by example when you eventually apply automation throughout the rest of your organisation.
One of the immediate benefits that will become apparent is increased employee efficiency. Since automation will eliminate the need to do many of the tedious and low-value tasks manually, your staff will be free to dedicate their time elsewhere. Likewise, managers will also be able to use their resources more effectively. As a result, better focusing their efforts on problem-solving and better integration.
Marketers have a lot to gain from automation processes, going from data enrichment to lead scoring and customer monitoring, just to name a few. Marketers can use automation to better plan, coordinate, measure, and manage all aspects of a marketing campaign, be it online or offline.
With automation, many accounting-related tasks, such as invoice generation, basic reporting, checking for payments and sending reminders, are no longer an issue for your employees.
By streamlining sales processes, such as your sales data management, CRM system and follow-ups, your leads will always be routed to the right people to make the conversion into a paying customer.
Since many manual processes will be replaced by automation, the human error that usually accompanies them will also be significantly reduced.
Automation can easily find its place in communication by providing automated responses. It means that recipients will no longer have to request status reports, and your team members can better focus their efforts elsewhere.
While this list presented here is not exhaustive, it does provide a clear picture of how much of a difference automation can bring to a business, especially a small one that can thrive on efficiency.
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