3 Tips To Stay In Control Of Your Inventory

The importance of an agile and responsive supply chain cannot be understated. All it took was the COVID-19 pandemic for businesses to learn just how important an uninterrupted supply chain is and how interruptions could have major implications for business as usual. Our most recent supply chain problems focused on inventory shortages, especially relating to supply chain partners located in China and other areas that felt the brunt of the pandemic.

Here are three tips to help you stay in control of your inventory and protect yourself against future supply chain disruptions.

Use Inventory Management Software

Managing inventory is more than just keeping enough stock to meet your customers’ demands. It also incudes determining the best system for your company to source, organize and move inventory between your supply chain partners. The right management practices can help you avoid dead stock, optimize fulfillment and improve your company’s cash flow.

Traditionally, this task was a Herculean effort involving multiple spreadsheets and conducting constant data analysis through complicated formulas. Now, however, there are excellent choices for inventory management software that will do the hard work for you and stay on top of any potential supply chain issues — both now and five months down the road.

Work With Reliable Manufacturers

The strength of your business is often directly proportional to the strength of your supply chain. That’s why choosing reliable manufacturers to work with is crucial to ensure that your business reputation isn’t ruined by supply chain problems that are out of your control.

Building relationships with on-shore supply chain partners is one way to stay out of the fray. This keeps your inventory management safe from issues experienced by other companies with offshore suppliers, such as backlogs in the country’s ports and disruptions due to political or economic upheaval. Even once the COVID-19 pandemic is over, the potential for such disruptions could reasonably continue for a long time.

You can also have more control over the quality of materials by choosing American supply chain partners that provide more timely delivery of products and custom ordering options. Additionally, one problem companies often run into with having an offshore supply chain is not having an opportunity to visit the manufacturing facility to see what quality control measures are in place.

Practice ABC Analysis

If your business handles a lot of inventory, the process of controlling it can be challenging. For companies with larger inventories, approaching inventory control through the lens of ABC analysis could be a beneficial strategy for you to consider.

ABC analysis involves categorizing your inventory into three types. The first category is the 20 percent of your inventory which accounts for 70 percent of your profits. The second category is the 30 percent of your inventory that brings in 25 percent of your profits. The third and final category is the 50 percent of your inventory which accounts for 5 percent of your profits. This strategy allows you to focus on the first category above the rest when managing your inventory, allowing more flexibility and wiggle room for the remaining categories.

Find What Works for You

Ultimately, you can use a combination of tactics to stay in control of your inventory and protect against the loss of profits and reputation for your business. With sustained focus and staying involved with every aspect — from finding reliable supply chain partners to using technology to process all the data for you — you can meet and beat the challenges involved.

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