Quit shrinking your profits because of poor Inventory management!
Are you growing inventory to meet the increasing sales demand? Don’t diminish your profit growth by losing inventory along the way. Remember, loss of inventory directly affects your bottom line profits. Not to mention that there is nothing more embarrassing then telling your customer you have the product only to find out you were out of stock. You lost the sale, looked unreliable in front of the customer and reduced your profits; all because your inventory controls were inadequate.
“Shrink” can be minimized and controlled through effective procedures and follow up. When I started learning how to manage inventory it was a paper and pen exercise. Microfiche was high tech in those days. Fortunately, the inventory systems improved and we were expected to maintain a very low shrink, usually 1% or less. Even with the best systems in the world, you still must have a culture of inventory management to truly drive sales and profits.
If your organization is struggling with inventory issues here are a four proven inventory concepts to consider:
Emphasis. What’s your culture? Do you have the proper emphasis on inventory? Be honest with yourself - does the entire team help control inventory from supply chain through the sales process, or is it one of those duties that seems to get overlooked? The team needs to fully understand the impact to sales and growth that quality inventory management supports.
Training! Everyone has a basic concept of inventory concerns. Shrink, Turns, cycle counts. But if the team understands the 101’s and 202’s then the expectations for solid controls seem natural. Train in the culture of Inventory Control.
Cycle counts versus annual inventory. How are you counting and how often? If your team thinks that your annual inventory is the time to “fix” the discrepancies, something is wrong! Routine and regular counts to correct and maintain accuracy will help to avoid that year end surprise. Some organizations do such a good job maintaining accuracy with cycle counts that they never dread end of year inventory. They have confidence in their daily monitoring and counting and can actually use the stated inventory number off the ledger.
Accountability. It’s not the “System” you are using! It’s the execution of the system. Yes you might need new software, yes you might need to change some procedure, but executing and performing due diligence with what tools you have is critical to your business. Accountability is key. The inventory was there! Where did it go? Don’t accept the non-answer on your precious inventory dollars!
Not everyone has the desire or understanding to keep inventory coordinated. I have been involved first hand with hundreds of year end inventories. As a corporate, multi unit manager in the parts business, I would do as many as 30 entire store counts per year; not to mention the routine cycle counts and daily routines of auditing.
If you want to discuss theory on supply chain and inventory control, I am sure there is someone out there to have coffee with.