Inventory Management

i4.0 or Industrial revolution 4.0 is what industry leaders seem to be talking about lately. If you haven’t heard of it yet, don’t worry! This blog post talks about what i4.0 is and how it will impact the practices of inventory management. So, let’s get started!

i4.0

As the World Economic Forum explains, Industrial revolution 4.0 is the fusion of various disruptive technologies that will change the way we work. Artificial intelligence, 3-D printing, IoT (Internet of Things), quantum computing and many more are a part of it. With its own pros and cons, the major areas that i4.0 will affect are people, government and business.

i4.0 and Inventory Management

In the business sphere, the manufacturing sector and their supply chains are already leading the adoption of i4.0. In fact, the use of various technologies will transform the current supply chain model to become a Demand Driven Supply Chain (DDSC). That is where the impact of i4.0 on inventory management stems from. A DDSC implies that your supply chain works based on the given level of demand or in other words, a highly efficient JIT production system.

Benefits

Once i4.0 revamps your supply chain to become demand driven, benefits on your inventory management will be multi-fold:

• Your inventory level efficiency improves as you don’t over-stock or under-stock.
• Inventory turnover increases as you produce to fulfill the given demand.
• Lead times shorten as i4.0 empowers your supply chain to manage different orders faster.
• Your COGS will reduce since you don’t incur costs of holding inventory beyond its use.

Key Areas to Focus

As i4.0 grows, your inventory management practices will evolve as well. There are certain areas you must focus on in order to adapt to the revolution:

1. Visibility – Visibility across your supply chain and inventory levels is key to manage your inventory better. Transparency should go beyond knowing the level of inventory at a given time. It should also include the quality, source, and lifetime of your stock.
2. Analytics – Collecting real time data from your demand and supply channels will give you the actual information you need. Integrate with your POS system to get insights of customer demands. Also, knowing how much time it takes you to produce, ship, and deliver will be vital.
3. Forecasting: Data and Analytics will lay the groundwork for your forecasting capabilities. Your supply will revolve around demand, which increases your efficiency. Use your Inventory Management System to control all aspects in a central location.
4. Collaboration: Make sure all your departments and suppliers are on the same page when it comes to creating a DDSC. Your infrastructure and communications will need to be robust in order to adapt to unseen circumstances. A good strategy is giving key stakeholders access to your operations based on their role.

In conclusion, the 4th revolution will change the way you manage inventory. The timeline might be long, but change is inevitable. Planning to adapt now will give you a head start in the race. If you’re interested in learning more about Inventory Management, feel free to reach out to us at Clear Spider today!

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Inventory is an important asset for a business. However, this asset can be costly if not moved quickly. In fact, holding inventory can cost you a whopping 25-30% more than its unit value. These costs can include taxes, storage, damage, theft etc. But not your Opportunity Cost, which is another 15% or more. In today’s competitive scenario, it might just make sense for your business to adopt lean inventory practices.

What?

Lean inventory management is exactly what you think it is! The idea is to eliminate waste from your inventory. Waste in the form of costs, time and effort you require to manage it.  Having too much inventory is obviously harmful to your business. But, so can be going too lean on it. Hence, it becomes important to find the right balance of inventory you should keep compared to the demand and supply.

Why?

There are various benefits to adopting a lean system of inventory management:

1. Cost Reduction: First and foremost, lean inventory management will help you reduce waste and drive down your costs.
2. Fulfillment Time: You will be able to speed up your order fulfillment time and improve customer service.
3. Stock Turnover: High inventory turnover implies good business health to management.
4. Cash Flow: With less capital tied up in your inventory levels, you have freedom to invest or pursue other business projects.

How?

Here are some strategies you can use to implement Lean Inventory Management.

Inventory forecast
The first step to forecast for a lean inventory is to gather information. You should know the number of items stocked in your inventory, the type of items, their lead time, and turnover ratio. Collect all the historical data in one place to analyze and interpret results. Forecasting which items need to be stocked more frequently and when to order certain goods will eliminate waste and avoid stock outs.

VMI
Having Vendor Managed Inventory can also relieve you of the tensions of your goods. Under VMI, your vendor reviews your inventory, stocks it, and places any order for replenishment as needed. You can avoid over-stocking and increase your inventory turnover. Ultimately, your inventory holding costs go down and this positively impacts your profits.

Collaboration
For lean inventory management, you have to rely on both your suppliers and employees. It is in your favor to collaborate by making your supply chain more visible. Giving access to your inventory system in real time can help both parties to use the information and set minimum, maximum, and re-order points. Setting an automatic replan system can further streamline your efficiency.

In conclusion, having a lean inventory management does not mean to keep zero stock, rather to adapt and scale so that you quickly respond to the market demand. Click here to learn more about how Clear Spider can help you improve your inventory management.

The holidays can be a stressful time, especially when it comes to inventory management. By considering these five keys, you can unlock a stress-free holiday season.

Predictive Analytics

Problem:

Inventory forecast numbers are inaccurate and firms are either left with a shortage amidst the holiday rush or excess inventory in the new year.

Solution:

Predictive analysis can more accurately forecast demand by taking into account all affecting factors. This type of software helps you optimize allocation and replenishment to balance inventory across locations and meet customer demand. Whether you have one product and two locations, or 1.000 products and 100 locations, there is a solution that can help you. 

These systems account for factors such as product color or size, the distance between stores, product price, cost to transfer, or inventory amount. As a result, you can use this to more accurately meet demand. Predictive analytics give organizations the ability to be proactive instead of reactive. For this reason, you can meet demand during the holiday rush.

Inventory Accuracy

Problem:

Inventory levels or historical data is tracked inaccurately and incorrect data being used to make decisions.

Solution:

Before you can implement automation in your demand planning, you need to make sure you have accurate data. Accurate information is the foundation of agile decision making and creates confidence in demand planning. Many companies make decisions off of skewed numbers and end up with skewed results. Let’s say you plan to sell 150 baby dolls this December. You predict this based on the past three years of holiday sales data. What you don’t realize is that your inventory count has been off by 20 parts for the last two months. Those 20 parts were shipped out as part of a sample campaign for your major customers but weren’t properly recorded.

Your forecast may have been correct with the data given, but since it was inaccurate you are now short product a week before Christmas. Implementing processes to ensure data accuracy is vital for any time of the year, but especially around the holidays. Putting these processes in place well in advance can help you find success during those busy winter months.

Automate your Inventory

Problem:

During the holidays you have more product to deal with in a shorter amount of time. This leaves more room for error in decision making.

Solution:

Implementing automated software to track and replenish your inventory can save you time and money around the holidays. Setting this up before the holiday season will ensure everything’s running smooth before the big rush. By using automated software in tandem with barcode tracking, you can set up a real-time system of information.

As soon as you sell or receive new product you can scan the item and the inventory system will automatically update to reflect those changes. The inventory management software tracks inventory levels and send alerts when you are running low. Some systems have even advanced so that orders can automatically be placed when inventory drops below a specified level. Automating inventory management lets you know exactly when you need to restock and ensures your orders always make it home for the holidays.

Contingency Planning

Problem:

After the holiday shopping is done, many organizations frantically decide what to do with excess inventory and end up losing profit on items that could have been sold at full price in the new year.

Solution:

Having a contingency plan in place for after the holidays can help you have a stress-free December and profitable January. We all know the only thing that is certain about demand forecasting is uncertainty, and you can use that knowledge to your advantage. Put a plan in place for what will happen if your forecast is off and you end up with excess inventory. This contingency plan will vary from business to business and industry to industry. You need to take into account expiry dates, social trends, demand, and more. You might be better off to sell it at a discount in December, or you could boost profit in January by holding out.

Return Processing

Problem:

After the holidays are over, many gift recipients look to return or exchange products. Quite often they are missing the receipt or lack knowledge of the original purchase.

Solution:

Implementing a clear process is the first step in hassle free returns. Around the holiday’s many companies take on temporary staff to help with day-to-day operations. The one problem with this is that they are not as familiar with the internal processes. By clearly outlining the return policy internally and externally you can avoid potential confusion.

In addition to this, implementing a return barcode system can make your return processes more simple around the holidays. Some companies add “required for return” barcode labels to gift items or additional information to existing barcode labels. Employees can simply scan the barcode to get all the information to make the return or exchange.

The holidays can be a stressful time, especially when it comes to managing inventory. By using these five keys you can unlock a stress-free Christmas and a happy New Year.

Looking to learn more about inventory management and control? Click here to see how Clear Spider can help.

What do you think about when you hear ‘Halloween?’ Candy? Costumes? Scary Movies?  Unsurprisingly, inventory management professionals are thinking about the same things from a different perspective. They are thinking about the logistics of the holiday. How much candy to order, what costumes to stock – and how scary business will be if their forecast is off.

On average, Americans spend $7 billion on Halloween items. That includes items ranging from candy to costumes to decorations. The peak time for consumers making Halloween-related purchases is the beginning of October. However, virtually all purchases are made within the six weeks leading up to October 31st. You can imagine how much planning had to go into selling such a large volume of items in such a short period of time.

Many candy producers start preparing for this holiday almost a year in advance. Designing themed packaging, forecasting numbers, and starting production all require adequate lead time to be successful. The rush leading up to the spooky night is often talked about and well planned for, but what about after?

Post-Festivities

November 1st. The unofficial holiday for buying large amounts of candy at heavily discounted prices. You must be thinking, “that sounds great!” But for many supply chain professionals this is the real Halloween nightmare. It is when they will see if their forecasting paid off, or if they will fall victim of the post-Halloween price cuts.

The day after Halloween the demand for “fun sized” chocolate bars and candy corn drops dramatically. For many retail locations this means dramatic price slashing. While this might be great for the sweet tooth in your life, it is not great for the retailers.

So now the question is, if we can’t guarantee our forecasting will be 100% accurate, what can inventory planners do to mitigate the loss?

For manufacturers the answer is simple: only produce what retailers order. For retailers this means their inventory planners need to order their Halloween stock months in advance. However, having to plan so early leaves more room for error, and since manufacturers only produce for order, last minute deliveries may not be an option.

Inventory planners are put in a situation where there are two options. They can order under demand and potentially miss out on sales, or order over demand and have to sell at a discount. When faced with this decision, many planners choose to error on the side of caution and order an amount they know they can sell. This might mean ordering less than they would if they had the option to order closer to Halloween. As a result, this may also mean lost profit for candy manufacturers.

This is just another example of how each area of the supply chain connects. In order to maximize profits and minimize loss, retailers and manufacturers need to work together. This is especially important around any holiday when demand is so dynamic and unpredictable.

Managing inventory in today’s fast-paced world can be a daunting task. For this reason, many organizations are using specialized inventory management software. It provides them with the ability to manage inventory and analyze trends effectively. However, many companies are still asking one important question: “Is my organization ready to implement inventory management software?”

Is there an inventory system out there for every company? Well it is important to recognize that there are a few minimum requirements for a firm to meet. An organization should have structured processes in place, know their implementation goals, and clearly see its added value. If a firm meets this criteria, then it is ready to start looking for an inventory solution. If you’re still working on it, here’s are a few ways to start:

1. Structured Processes

Inventory management software is becoming an increasingly valuable company asset. However, present technology is not sufficient to solve each and every supply chain problem. An organization requires a structured set of processes in place for the software to follow.

It is not a means of replacing inventory processes, but rather a means of completing processes more efficiently. Companies should begin by outlining a process that all inventory items need to go through. A general  example of this may be a simple step process:

1. Receive an order
2. Pick an order
3. Consolidate items within the order
4. Pack the order
5. Send the shipment

2. Software Goals

Next, an organization should be able to clearly state their implementation goals. Many companies have generic goals such as creating automation or increasing efficiency. However, in order to achieve measurable success, goals need to be more specific and actionable. For example, a specific goal could be “We want to create more visibility in our supply chain by setting up notifications as orders move along our pre-set workflow.”

We know that the goal is to gain further visibility into their operations. Also, they have outlined a plan to set up notifications. By having this specific goal outlined from the start, this organization will be able to see clearly if their implementation is successful.

3. Return on Investment

Before using inventory software, you should be able to see how it will add value. Specialized software can be a big investment for many companies. If it is not clear how this will provide a return on investment (ROI),  it may be wise to hold off. The processes required in this step are a little simpler: Do your research, know what the costs and benefits of a few different systems are, then determine which ones meet your requirements and cost.

If the cost of implementation is offset by the extra profit it will bring in, then you are ready. If not, it may be better to wait until this cost can be off-set.  Also, successful implementation is not always instantaneous; the initial cost of this process is often not profitable for the company. With time to develop and become fully implemented, this will change. 

Inventory management software can provide a number of different benefits to organizations. However, for implementation to be successful, firms should meet three criteria. They should have structured processes in place, a specific goal to achieve, and a clear view of how the software will add value. If you meet all theses criteria, then you are ready for inventory management software. Now, it is time to start doing your research to find the system that caters to your organization.

 

Investing in inventory software can be a big step for any organization. The question that most firms want an answer to is: “What will my return on investment (ROI) be?”

The answer is largely the same: You get what you put in.

Inventory processes vary for different organizations. So, inventory software that caters to your individual needs is critical. Finding this software fit takes time, effort, and a fair monetary investment. If you are willing to invest now, you will see a positive return in both short and long term.

It may be difficult at first to see how spending money can save you money. Many think of inventory software as just another way to store data. However, it can be so much more than that. Many systems offer additional features and functions. Imagine what you could do with these reports, analytics, automation, and integrations. Finding a specialized system can help you save money long-term. As well as provide long-term benefits for your company.

Prioritize Needs

Reports and analytics can help you see the “big picture” of your inventory system. With these systems, you can view historical data, product performance comparisons, or summaries of all inventory. Using software, you can give more meaning to your data. For example, you can generate info that allows you to make decisions quickly and more accurately.

Save on Labor

Mundane tasks that used to take hours to complete manually can be completed much more efficiently with the right software. As a result, you are lessening the time it takes to ship, receive, or process orders. There is no need to spend hours keying in product codes when one scan can do the work for you. 

Improve Accuracy

Inventory software helps to track and manage your products in real-time. Know where your stock is, how much you have on hand, and when you need to re-order. With replenishment, the software can take that info and generate orders. As a result, you can take the guesswork out of your inventory. This will lower your holding costs and produce less spoilage.

Finding the right inventory management software to invest in can be a daunting task. However, if you are willing to put the initial investment in, you will experience a high return.

Contact the Clear Spider team today if you are interested in exploring options. We can help you find a solution to fit your needs no matter the size or complexity of your organization.