Perhaps one of the most challenging situations for companies is running out of inventory when their clients are simply craving more and more of their products. And even though many inventory experts have come up with different theories and ways to always ensure inventory existence to meet customer demand, holding too much inventory can actually be detrimental for the company’s working capital and profits.
However, as per previously discussed by David Kiger in older posts, for many companies and businesses in general, the simplest solution is Just-In-Time inventory management: ordering and receiving materials close to the exact moment when they are needed. Thus, companies can make important cuts in costs, overhead and the costs commonly associated with transporting and storing materials.
Always keep an eye on inventory
There are some key activities around the whole Just-In-Time theory to seamlessly ensure its implementation. One of them is the need to always keep an eye on the way companies use their supplies, and, most importantly, keep an eye on timing replacement deliveries exactly when they are needed.
Thus, this whole approach to inventory management is, in reality, a balancing equation procedure so to speak: companies must strive to avoid running low or out of stock—which would definitely upset their customers—, while also reducing their inventory costs.
Embrace the power and the use of technology
The fourth industrial revolution allowed companies to take care of some processes that otherwise they would have to do manually. In that sense, companies who still rely on handling their inventory manually are really open to make mistakes and prone to errors and inaccurate projections, without mentioning that they would have a hard time accurately measuring supply and demand variables. The good news here is that technology has already taken care of that.
In the market, there is a myriad of different options to help companies manage their stock, ranging from a fully integrated ERP to other less expensive software. Whichever the case, today’s juncture has almost made mandatory for companies to automate as much as they can; however, it is no secret that these innovations also demand a heavy investment and small businesses, for example, cannot simply allocate a huge part of their resources in a simple technology. Stock and inventory experts seem to agree upon the fact that, at the minimum, businesses, irrespective of their size, need a system that alerts them once inventory levels have reached a certain amount so that they can replenish them effectively.
Make sure to reduce miscounts
Inventory miscounts are more familiar to industries than they should. They are particularly common at the receiving and order completion stage, particularly if the company carries out these processes manually—using electronic data and bar code scanning is indeed a very effective way to get rid of possible data errors.
Likewise, much larger companies should strive to sync their software and their systems with those used by their suppliers so that they can measure and monitor stock levels at facilities, factories, distribution centers and stores.
Aside from the aforementioned advice, here are other tips on how to seamlessly adopt and implement the Just-In-Time inventory management strategy
Assess the supply chain
Companies, irrespective of the nature of their businesses, should always strive to build strong, long-term oriented relationships with their suppliers and vendors. The whole idea behind establishing a smooth way to communicate on both ends help the parties involved to go the extra mile for their customers and suppliers without compromising productivity, resources, and performance. Besides, it is also a way to reduce costs and general overhead.
Always strive for transparency
There is no simple way to put it: companies and businesses always must be transparent and upfront about the way they take care of their stock and their lead-time requirements to comply and meet orders from customers.
Get help from a supply chain specialist
As already mentioned, Just-In-Time inventory management is just one way to, or, rather, one step in increasing operational efficiency. With that being said, companies and businesses, in general, can harness the experience of a specialist. Hiring an expert to look at all the processes and aspects of a company’s supply chain can really be extremely beneficial to both supply chain management and the production processes. An outsider often brings to the table new perspectives and ideas that often provide value to the company, thusly allowing them to come up with ways to eliminate waste and improve the way they currently do businesses.
Be that as it may, Just-In-Time inventory management is often seen as the most efficient method of managing and holding stock. It is definitely a good idea for companies and businesses to look into it in hopes of minimizing the amount of goods they hold at one time: it definitely provides a lot of benefits.
* Featured Image courtesy of MyStock.Photos at Pexels.com