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Inventory management impacts the efficiency of your business. You must consider everything from the cost of warehousing to the accuracy and timeliness of deliveries. You need to be on top of everything regarding your raw material supplies. By managing your supplies well, you don’t end up with too little material, nor do you have an excess of materials. Handling inventory can be challenging for businesses. When you make a mistake, you could have ripple effects that negatively affect the company.
The following are a few tips to help you manage your resources and keep ahead of your inventory.
Use Good Inventory Management Software
Business owners can automate inventory tracking, planning, and manufacturing with inventory management software. You can reduce risk and streamline costs, which will ultimately benefit your bottom line. So, for instance, if you use a service such as Seiler Plastics to manufacture your product, you will want to place the quantity you order into the management software system and have the system automatically decrease and inform you of the part-use. Consider speaking with a manufacturer to see if they can schedule regular deliveries. Using software can also send automatic updates and tell you when to reorder your parts based on your seller’s lead times.
Consider Your Supplier Delivery Time
Think about the length of time a product takes to reach your dock or site from a supplier. You can find this information by asking your supplier. You also want to use your software to keep track of your supplier’s performance. So, if your supplier informs you, they can deliver in four weeks, but you have been following their performance. As a result, you notice the production and shipping delays. You see the customs and other unexplained delays. You notice that it is taking eight weeks, instead of four. Knowing the length of time it takes for your supplier (the lead time) to deliver can help you either make your order earlier or find another supplier who provides within the time specified. Knowing the lead time for your supplies can help you adjust your purchasing timeline to ensure you always have enough resources and don’t need to purchase additional parts at the wrong times.
Perform Your Customer Demand Management
Most customers let you know what they want. You have to organize it by using order and forecast software tools. These types of tools can prevent customers from canceling or changing orders on you at a moment’s notice, which in turn causes disagreements. Documenting your agreements can help you avoid conflicts and issues with your customers.
Know the Cost of Your Supplies and Your Carrying Costs
Analyze the inventory cost and decide on the amount of stock you can buy and hold. So, if you have customer demand increases or your supplier has delays, you might need to have a little inventory on hand to make sure you have enough material to manufacture your products promptly.
You will also have inventory carrying costs, warehouse space rental, and insurance costs. To create an appropriate budget and ensure that your parts costs do not exceed your revenue, you must include these costs.