Inventory systems have been around for a while and inventory management itself has been drilled into a science. So, what else is there to teach, you may ask. Well, a lot actually. The path to a well functioning inventory management system is a perilous path and has a lot of downfalls. So, how exactly do we do it? Here is some expert advice.
Using Inventory System To Avoid Spoilage
Spoilage is the bane of retail business. As you already know spoilage is the depreciation of products from its maximum value to zero, if you are lucky. Lucky because spoiled products can actually destroy products that are supposedly in a good condition. So, how do we avoid spoilage using our inventory system?
The first tip is simply to use the inventory system’s main function, which is to manage your inventory. The main reason why spoilage occurs is because of an error in judgement during the procurement process. That singular number of how much you need to order for a particular product is actually very important. That number is determined from several factors that influence each other. This complex web can be easily unravelled as long as you have reliable information. Thus, the first tip to ensure that you can avoid spoilage is to track data properly. This does not only include tracking the products that are in the stockroom, but the products in the shelves as well. Furthermore, the sales of that particular product have to be part of the numbers that you crunch. The rate at which the products are sold should be used to extrapolate the possible sales the next time the business opens. Next, a proper profile should be obtained from the supplier. As an external entity, ensuring that you have a consistent delivery pipeline from your suppliers is easier said than done. This reliability factor should be put into account and consider that the count down to spoilage begins after the product is packed and not once the product arrives. And finally, the states of the stockrooms should also be put to mind when making an order. Although empty volumes in the stockroom is money wasted, it can easily be reclaimed. The price of spoilt items, however, cannot be as easily regained.
The next tip to avoid spoilage is to know your product and strategize product placement. This may seem trivial given it is literally fitting shapes into spaces. However, this is extremely critical and may even present itself as a difficult problem to solve. For instance, products have a certain stacking limit which should be followed. Another important thing to remember is that products have different expiry dates and grouping together products that expire together might be the best. The reason is to make sure that there will not be any leaking from one of the products to another. Although uncommon, some product’s expiry dates actually refers to the expiry of the packaging. This means that certain chemicals or the products themselves can contaminate the rest of the stockroom should they become spoilage.
And finally, there are certain goods that speed up spoiling further if not properly stocked. For instance, frozen goods are meant to be stored as it was named, in a freezer. Be careful to manage these kinds of products properly given the damage that they might cause if unhandled properly.
How Inventory System Can Help With Spoilage
Items sold in the store take a meticulous path before it ends up where it is for the customer to pick up. The danger with becoming too familiar with a certain way of doing something is that you begin to accept it as the norm with all its flaws. This is one of the aspects of inventory management where the inventory system can help.
The first way to eliminate waste is to properly profile the suppliers. Not all suppliers will deliver products at the same level of reliability. Some may deliver on time, too early, and worse, too late. Because of this uncertainty, products can end up on the shelves at unexpected times which then leads to understock or overstock. If you have been intently gaining the reigns of your retail business, you would know that both situations are equally terrible. Using the inventory system, you can start to keep tabs at your supplier commitments and the level of which they adhere to it. This includes how close their actual delivery is to the date that they initially set. This also includes the quality of the product they deliver. It might seem surprising from the outside looking in to find out how much delivered goods are considered bad orders. These should be taken into consideration and prepare an allowance to still acquire the desired stock level in the store.
Using artificial intelligence, you can automate the decision process in inventory management. Difficult decisions like how much stock to order, where to store the product and which products are considered dead-stock can all be processed using a combination of massive data, called big data, and a learning algorithm. Of course artificial intelligence is not without fault especially earlier in its implementation where there is little data to work with. What it can give you, at the very least however, is the capability to support your decisions through a paradigm called decision support systems.
Perfect inventory management systems do not exist. But the reason why they are still at the heart of retail does not necessarily wane because of that. There are times when retail businesses might feel the need to rely on other techniques to patch difficult periods and cause data integrity issues in the system. Although unavoidable at times, the goal has to be to minimize these kinds of incidents. The reason why these can be so devastating can be understated in the grand scheme of things. In the end, however, a ripple caused initially by simple negligence can cause a massive wave. On the bright side, as you go on, you can get a better handle on things.