Most businesses would say that increasing productivity and boosting profits are two things that are vitally important to them. However, most businesses also engage in inventory management techniques that are draining both time and money from their business.
Manual inventory control processes – which many businesses rely on – cost more than you might imagine. Manual processes result in increased stock holdings, the cost of labour to count it, lost productivity, compounding errors, and lost sales opportunities from customers left dissatisfied.
For inventory-heavy businesses like yours, having visibility over stock is vital to keeping customers happy and identifying cost-saving opportunities. Manual processes are never going to achieve that – but automation can.
Download HARMONiQ’s Effective Stock Management eBook to discover how to effectively manage stock in your business and control your inventory.
Are your processes creating hidden costs?
Billions of dollars of revenue are lost by inventory shrinkage every year in the warehousing, retail and distribution industries. In most cases, the losses I see are caused by errors and inefficiencies in inventory management.
Working with SME’s across Australia and New Zealand, here are some of the most common costly processes I see.
Exception reporting – or the difference between expected and actual performance of your inventory – helps control costs and tighten margins. But completing this manually requires endless data entry, stock and data reconciliation. Not only time-consuming, this process has a high incidence of human error – and just one mistake can skew the results of an entire report.
When you’re relying on estimations, changing paperwork and guess work to complete stock orders, the chances of getting it right are slim. You risk ordering not enough of what you need, too much of what you don’t – and not being able to deliver what your customers want.
Delayed stock control:
Stocktake has always been an important part of inventory management, but it’s often too little, too late. Manual stocktaking tells you little more than what you have and what you don’t – it gives no insight into why losses are occurring, or what you can do to minimise them.
Workflows from stock replenishment to late delivery notifications to suppliers are still being completed manually – costing your workforce priceless hours and productivity.
When you rely on manual processes to carry out a big task like inventory management, there is the chance for mistakes at every step. These errors are all costing your business money – and they only compound as time goes by.
The importance of stock visibility
The common theme in all the problems resulting from inventory management is visibility – specifically, a lack of it. Time intensive, paper-based management systems restrict the visibility of stock across your business.
To successfully order, manage and sell stock, you and your staff need to know:
- What stock you have on hand, and what needs to be ordered
- Where this stock is located, and if it can be transferred between warehouses
- When a delivery is coming or going
- How much is being delivered, being bought or being moved
This visibility of what, when, where and how builds a bigger picture and can ultimately tell you what many manual processes can’t – the WHY.
Automate your inventory management
Automation makes the ‘why’ of inventory management completely transparent. By replacing manual process and disparate systems with inventory management software, you can automate and integrate your systems – from POS, to ordering, to reporting – to give all staff 100% visibility of inventory data.
By leveraging automation with inventory management software, you can achieve:
- Precision ordering
- Appropriate up-selling and cross-selling
- Accurate reporting
- Timely variance investigations
- Automated workflows
And that’s just to name a few – all of which are going to decrease unnecessary expenditure and boost productivity.
In fact, studies have shown that an integrated inventory system results in a 7.5% decrease in the frequency of out-of-stock inventory. That’s an immediate opportunity for increased sales.
Organisations driven by effective inventory control have the edge over their competitors because increased visibility allows them to eliminate inefficiencies and minimise excess – decreasing costs and improving customer satisfaction.
Download the HARMONiQ: Effective Stock Management eBook today as your next step guide to becoming an organisation driven by optimised inventory control.
If you would like to see the impact effective stock management can have on your business, then click to request a demo of HARMONiQ and I’ll be in touch shortly.
Drew Arthur is the Managing Director of Micronet Systems and is focused on helping business leaders overcome inefficient sales, inventory, and customer relationship management practices by leveraging cutting edge technology. If you want to gain better control of the inventory management in your business, click here to organise a demo to see how HARMONiQ Business Tuning Software can make a difference to your business.