Maintaining a balanced inventory to meet customer demand has always been a tricky process. During slow seasons, you have to worry about the waste of capital and an increase in operational costs. On the flip side, not having enough stock during busy periods could lead to missed sales and harm to reputation.
Inventory Control Methods
Balancing inventory levels will depend on the type of inventory management solution that is used: push inventory or pull inventory. Push inventory management involves ordering products based on future customer demand. The forecasting can be for the next month, quarter, or even a year. A major disadvantage to push inventory is the higher chance of overstocking.
With pull inventory, your goal is to have a minimal amount of stock on hand. Inventory is refilled by what customers have already ordered. Some issues with this system are the high manufacturing costs and potentially inaccurate forecasts. To overcome this shortfall, some businesses are combining push inventory with pull inventory.
Accuracy Is Important for Balanced Control
Even with efficient methods to procure inventory, an inaccurate materials count can cause these control methods to fail. You could lose inventory when it is not placed on the correct shelves or in the right area. This could lead to false data in your records and disrupt the manufacturing process.
Many organizations are turning to management software and automated systems to help balance their inventory. These solutions allow for better inventory accuracy using tools such as real-time data entry. With this tool, sales representatives will have a better idea of which products to advertise, while warehouse staff will know precisely where goods are located and in what quantities.
Building a balanced inventory scale is essential for meeting customer demand and streamline warehouse operations. Evaluating your method and adopting the right inventory planning model should allow you to successfully stock and deliver goods for customers.
Infographic created by WSI