The single most effective inventory management strategy to control and reduce inventory costs is…
A strategy of discipline. Regardless of size, large or small, most companies work to achieve two primary objectives – grow the business by satisfying the customer and manage costs. Businesses seek big data to deliver strategic recommendations based on assessing the customer experience and measuring the cost of inventory. Working under a discipline strategy, companies can effectively mitigate two potential risks – dissatisfying customers by promising a product when there is none and increasing cost by losing tack of outdated stock in the warehouse.
Inventory management techniques that support a strategy of discipline include the following:
- Leading by Example: Discipline must be fostered from the top down, starting with senior management. Leaders must develop effective routines and set clear expectations regarding financial and operational objectives.
- Determining Appropriate Levels: Before launching an inventory process, appropriate levels must be benchmarked on competitive standards, researched for full process integration, and communicated across the organization. These levels should be clearly understood by all and reviewed regularly for maximum efficiency.
- Creating Quality Processes & Systems: Checks and balances must be implemented to streamline inventory management processes. How and when will assessments be conducted? Who completes them? What systems aide the processes? How do you know they are efficient?
- Accelerating Data Knowledge: Leveraging technology is a key differentiator to establish a competitive advantage in the industry. Staying up to date on inventory tracking measures and utilizing data analytics to make business decisions, inventory managers must work with technology to continue driving down the bottom line and manage inventory costs.