Building Block #4: Inventory Management

Welcome back to our series on the critical building blocks needed  to successfully grow your business! Building Block #4 focuses on Inventory Management.

(If you missed building blocks 1-3, click here!)

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It’s logical to think that this number continues to decrease as the effect of the COVID-19 Pandemic makes having a firm and confident understanding of both the ability to supply goods as well as the customers’ demands challenging at best. (Remember the toilet paper saga of spring 2020!?!?)

In a world where we have little control of outside factors, inventory management becomes imperative for any organization looking to grow. The three keys to success are:

UNDERSTANDING SUPPLY & DEMAND

While this is likely the most difficult “key” to success, it’s important to be both realistic with supply and have a sense of demand from your customers. Factors to consider for supply:

With supply in mind, equally important is understanding the demand of your product from your potential customers. To do that, some factors to consider are:

VISIBILITY OF YOUR INVENTORY

In order to have control of your inventory, you have to know where it is. However, this becomes increasingly more difficult as your operation becomes more complicated by adding new co-packing sites, distribution centers and other inventory holding locations. Most locations can offer you some kind of support whether through their online portal or a report they send you on a given frequency. Your best bet is to have a system in place that can aggregate all this data, from multiple facilities, into one place. Just as importantly, having a system in sync with your activity (product in and out) is critical to keep your data as accurate as possible. Further, having this be an efficient process is crucial to maintaining the data.

ORGANIZATION WIDE ALIGNMENT

Like visibility, organizational alignment is a contributing factor of why forecasts don’t match up to reality. In particular, sales and operations have two different focuses, naturally causing them to miss-align. Proper visibility as described above will be very beneficial to both sides. The key is understanding that when you’re in an inventory pickle, which is bound to happen, everyone needs to be aligned on how inventory is distributed. 

While the actual solutions of the 3 keys to success are easier said than done, we’re hopeful that at worst this serves as a helpful starting point or checklist to identify where your organization needs to focus on as you continue to grow. Our team at YourLogistics has both the systems and experience in navigating these situations both at a strategic and day to day level. To learn more and discuss how we can support, send us an email at hello@yourlogistics.us.

Thank you for reading, and keep an eye out for Building Block #5:  Compliance. Don’t forget to sign up below to receive these articles directly to your inbox!