From Guest Contributor: Stephanie Thomas, G.Neil
Businesses and organizations of every size and type face the daily challenge of effectively managing inventory. Inventory can include raw materials, office consumables, finished products and unfinished products on the assembly line.
If any of these different types of property are not properly accounted for, the company will suffer a loss. Lost or wasted inventory eventually leads to a financial loss for the company. Effective management of inventory will not only ensure the company does not suffer a financial loss, but will also improve the opportunity the company has for making a profit.
Supply Chain Management
The most effective way to take control of your company’s inventory management is to look at inventory control from where it starts at your suppliers, to the end of the process when the finished product is in the customer’s possession. Supply chain management is an inventory control management approach that can tell you exactly where each and every item you have purchased from your suppliers is located.
Effective inventory control begins when a company develops an integrated supply chain management system that incorporates the following key factors:
• Receiving must ensure everything signed for on the shipping documents were actually delivered by the supplier.
• Manufacturing facilities must track raw materials through the entire manufacturing and assembly process. Any materials lost because of improper usage, excess dropped on the floor or defective final assembly must be documented. Lost materials are then accounted for in the company’s financial statements.
• All consumables used in the manufacturing process or in the administrative process of the company must be documented.
• There must be an accurate accounting of every finished product that leaves the manufacturing facility. The shipping company must ensure everything loaded in the truck is unloaded at the distribution center. All shipping loss must be documented as an inventory loss.
• The distribution facility is responsible to keep an accurate accounting of everything that is stored in the facility. Every loss that happens because of inventory mishandling, or happens because a product is stored beyond its expiration date must be documented. Product that remains in storage because there is weak customer demand becomes a financial loss for the company. Inventory loss due to excessive storage time is documented as a loss against inventory control.
• Shipping is responsible to ensure everything on the customer’s order is actually placed on the delivery truck.
• The retail outlet that receives the product must ensure they receive everything listed on the shipping documents.
• The retail outlet is responsible to ensure every product placed on the shelf is actually sold to a customer. Inventory control at the retail outlet includes an accurate count of products on the shelf, and product stored in the back room. Products lost, damaged or stolen at the retail outlet may be documented as a loss against inventory control.
Computerized Management Systems
Effective inventory management requires an integrated management control system that provides managers with up-to-date and accurate information on inventory levels at any given point in the day.
Take note that explaining this process for staff in employee training ensures system information is distributed in for those performing operations. Accurate and timely inventory data provides management with the information required for forecasting, planning, ordering and the ability to rapidly take advantages of opportunities in the marketplace. All of these functions require the use of integrated software systems that allows employees to input data related to inventory throughout the work day.
Author Bio: Stephanie Thomas, G.Neil
When Stephanie Thomas is not writing management tips for professionals, she works for G.Neil, the leading HR tools and employee training provider.