Inventory management assists businesses in determining which and how much amount of inventory to order at what time. It keeps track of inventory from acquisition to sale. The practise identifies and responds to patterns to ensure that there is always enough stock to fulfil customer orders and that a shortage is properly announced.
Inventory management, as part of your supply chain, includes aspects such as supervising purchases — both from suppliers and customers — maintaining stock storage, controlling the amount of product for sale, and order fulfilment.
Naturally, the precise inventory management meaning for your company will vary depending on the types of products you sell and the channels through which you sell them. However, as long as those basic ingredients are prevalent, you will have a solid foundation on which to build.
In this article we are going to introduce you the six basics or must have of inventory management, which is necessary to keep in mind before investing your time in organising a better inventory management for your business.
So do read the whole article till end: –
If an item can be stored somewhere, that somewhere must be given a name and labelled with that name. If it does not, time will be wasted searching for items. People will store items in the incorrect location. Locations will be referred to by multiple names, and your inventory will be constantly disorganised.
For many of the same purposes that apply to locations, all of your items ought to have well-defined, distinctive descriptions. Individuals may be confused about whether they have stock on an item or what items need to be ordered if there are no good descriptions. It can also be difficult to find items in reports or similar products in your inventory system. Our thoughts on writing good explanations for your items are extensive, as we’ll explain later.
Quantities are given meaning by units of measurement, such as “pcs” “ea.” “lbs” “bags,” and so on. These units should be kept separate from the descriptions and numeric quantity fields. Using well-designed and consistent units of measurement will help you understand stock levels, shipping quantities, and ordering quantities.
GOOD SOFTWARE SYSTEM
If you’re reading this inventory basics guide, you’ve probably realised that using pen and paper or a spreadsheet to keep track of your inventory isn’t going to cut it. Good inventory software will help you track your inventory and give multiple users access to it. It also provides insight into your inventory activity and aids in maintaining an accurate historical record of what has occurred.
POLICIES AND TRAININGS
The people who work with your inventory and use your inventory system are the most important factor in establishing a decent inventory management system. You must ensure that these individuals understand what to do with items that are received, removed, reserved for future use, or necessary for production. They must also understand who is in charge of carrying out specific transactions, and so on. Although this may only be one or two people in some cases, there is nothing wrong with writing down your policies and ensuring that they are followed.
GOOD STARTING COUNT
Booting data into a new inventory computer program is an excellent time to take a good stock count. Getting a good stock level count will be easier, faster, and more organised once you’ve labelled your locations, cleaned it up your characterizations, created item numbers, and consistent units of measure.