“But customers choose my company because we always have what they want in stock!”
Can you really reduce inventory without losing customers? Some companies build their business model on having plenty of everything in the warehouse so that at a moment’s notice, they can rush out orders. The cost for conducting business this way, however, can be draining. And when you have to maintain A & D software and an electronic ATF software, it can be even more challenging.
Inventory is a significant investment for many companies, sometimes even the largest asset. Sure, you want to reduce your inventory, but to do so without a plan for managing it more effectively can be disastrous. These five steps can help you plan and reduce inventory without losing customers to your competitors through the dreaded “out of stock” messages.
Five Tips to Reduce Inventory Investment
Not every business can reduce their inventory in the same manner, but everyone can probably tighten inventory levels to some degree. Try these five tips to reduce your inventory load and see where you can further reduce stock levels without harming customer relationships.
1. Reduce order times
One reason why many companies maintain excess inventory is because it’s so hard to get new materials in the first place. Rather than wait weeks or months for an order, they’d rather keep items in stock so they can fulfill customer orders without delay. Yet this adds excess inventory and ties up capital that could better be used elsewhere. The answer may lie in reducing ordering cycles. With better inventory data, you can potentially order as needed, rather than ordering on a monthly or weekly schedule. Negotiating faster shipping times with vendors is also another possibility. Seek faster modes of transportation, and understand the trade-offs between fast and inexpensive; you often pay more for faster delivery. Carry some safety stock, but reduce your total inventory to levels that better match customer demand.
2. Change your order cycle
A benefit to data systems such as ERP systems is that you can see when items need to be ordered in real time. You aren’t locked into an arbitrary order cycle. By changing up your order cycle and ordering in a way that’s better aligned with demand cycles, you can reduce your investment in inventory without sacrificing service to your customers.
3. Improve forecasting
We mentioned that ERP systems provide real-time data, including inventory and order data. Reviewing orders and using the data found within your ERP system can help you improve forecasting. The better your forecast, the more accurately you can maintain inventory levels without overstocks.
4. Evaluate what’s selling
Businesses can easily slip into ruts when it comes to product inventory. If you’ve always carried certain items but haven’t looked at the reasons why you’ve carried them, it may be time to evaluate how well it fits into your current product line. You may be carrying obsolete items, or items customers just aren’t buying anymore.
5. Reduce SKU proliferation
Some businesses add customer-specific SKUs to their inventory to make a task easier, only to find that managing redundant items with multiple SKUs makes stock-taking worse, not better. If your warehouse is clogged with duplicate items tagged with different SKUs, look for ways to use your technology smarter and change how you’re tagging them. Reducing duplicate SKUs frees up warehouse space which can help you either add more appealing products or reduce overhead costs.
The best way to reduce inventory is to gain greater insight and visibility into your supply chain. The more you know, the more you can do throughout the supply chain to tighten costs and meet customer expectations. Products such as Easy Bound Book can help you both manage your inventory and comply with regulations. It makes your tasks of managing inventory, pleasing customers, and meeting expectations a lot easier.
Jet Reports – New Web Portal and Much More
The new Jet Web Portal provides a manageable repository for your organization’s reports. All your users – whether they have Excel and Jet Professional installed or not – can run and view reports directly from their web browser. The Jet Professional ribbon within Excel now includes the ability to publish your reports to the new Jet Web Portal. Just click the button, and you’re all set. With the Jet Web Portal, everyone can run reports directly from their web browser. And, if individuals or your organization has Office 365 Online, view the results of your reports in your web browser, as well. With just a few clicks, you can easily choose individuals or groups who can see and run your reports.
To learn about this and other new features, click here to see the Jet Professional 2017 brochure. It outlines what’s new in the latest release with links to a deeper dive on each new feature.