Are you getting the most out of your inventory management process?

AndrewDunbar

Inventory Management ManagerInventory is often the single largest asset on a company’s balance sheet and your inventory management process can have a huge impact on your organization’s bottom line. Understandably, the inventory management process is getting a lot of attention by organizations looking to squeeze out some extra profit in a challenging marketplace.

When you think about the priorities of your inventory management process, what’s the first thing that comes to mind? Is it reducing excess and obsolete? Improving on time delivery performance? Balancing stock between distribution centers? Strategic reduction of your lead times to help obtain and fulfill more customer orders? Now what’s your next priority? And the one after that? Your first answer is likely dependent on your industry, the size of your organization, your role, and your company’s corporate strategies. Your second answer, if you have one, is typically dependent on the maturity of your inventory management process. Finance and business management will prioritize inventory reduction to increase profitability. Customer service representatives prioritize stock-out reductions to improve customer satisfaction. Manufacturing operations needs just the right parts available at just the right time. The inventory manager is often caught between multiple groups with conflicting priorities and becomes an expert firefighter, skilled at supporting whoever complains the loudest. It’s easy for an inventory manager to get tunnel vision and give one metric too high a priority over others.

More mature companies will help the inventory manager out and define some clear corporate priorities, e.g. target inventory turns and customer service levels, to facilitate better inventory decisions. This can complicate things further as inventory decisions often require balance between these conflicting goals. The inventory quality ratio is emerging as a powerful tool to combine these priorities into a single measurement. Is that enough to find the right balance? Does your planning system help you analyze the trade-offs between competing priorities when making policy changes? Do your metrics and KPIs provide insight that help you improve the quality of your inventory investment?

We want your feedback. What does an inventory manager need to know on a daily basis? How does an inventory manager collaborate with colleagues? What business goals does an inventory manager have to meet? Help us to understand the complex role by completing our short survey:

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This is the first of a multi-part blog series focused on the inventory management process. Over the coming weeks we’ll share your feedback and my thoughts on the key improvement levers, metrics, and technology enablers that can help you see your inventory as an asset, rather than a liability. Stay tuned for the next post on the roles and responsibilities of an inventory manager.

Interested in learning more about inventory management? Check out the rest of the blogs in this series.

AndrewDunbar

Andrew joined Kinaxis in early 2015 as a solution blueprint developer after working primarily in business analytics in aerospace and electronics manufacturing. He now works with product management to convert business requirements into product solutions, while facilitating ease-of-use for customers. Andrew holds a Masters of Applied Science in Mechanical Engineering from Carleton University in Ottawa, Canada.

More blog posts by Andrew Dunbar

Discussions

  1. Never take Inventory Records Accuracy for granted. Daily cycle counts and root cause analysis are necessary to maintain a 98-100% Inventory Accuracy level daily. This helps your customers. It avoids back orders and improves time management. Your Customer Service Department can make promises to your customer about quantities available and be sure they are in the warehouse or distribution center. Inventory Accuracy is the foundation of Inventory Management.

  2. Thanks Chuck, I completely agree that inventory records accuracy is crucial for success. On top of counting, it’s important to also engage inventory and shop floor personnel to adhere to the processes that keep inventory accurate. No matter how well you write those processes, they’re meaningless if you don’t have buy-in from the people following them. Traditional inventory processes aren’t the only things that need to run well for inventory success though. Check out the 3rd blog in this series, scheduled on June 15th for my thoughts on some more of the levers that can be pulled to improve inventory success.

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