Inventory Management is a balancing act between operations, sales, purchasing, and finance. Rafel Mayol, from the Illinois Institute of Technology gives us insight into managing that balancing act.
Mayol suggests to us that best practices are a combination of steps a company can implement.
1. Improve the whole supply chain instead of just one step. We need to see the big picture and realize that if one thing changes, it will affect other steps in the supply chain. So, when one step is improved, it might mean there is a need to improve other affected steps in the supply chain.
2. Minimize logistic costs as much as possible without compromising customer service. We can minimize costs by following best practices and by using automated systems. Automated processes must include software, or a company, to automate the analysis that is an integral part of inventory management.
3. Use inventory pooling, and if needed hold inventory in separate locations. This again is a balancing act of how much warehouse space is needed and the cost of transporting to various locations.
4. Identify inventory that is obsolete and take action. You don't want obsolete inventory taking space. You might have to donate or discard some inventory. In donating some inventory, you might be able to take a tax break.
5. Use lean principles. Lean principles involve specifying the value from the standpoint of the end customer; identifying all the steps for each product and eliminating whatever steps you can; making the chain from point A to Z as few steps as possible; and periodically continue with this process.
Using those five steps will assist you in following best practices with your inventory management. For more information, please feel free to contact us.