How sophisticated is your inventory control process? Is it a tool that you can use for forecasting and planning, or are you happy if you can just keep your warehouse from emptying out before the next materials delivery?

Inventory Basics

Front line employees are trained on the basics of inventory management, to wit: don't let the shelves empty, but also don't order more goods than you need to satisfy demand. More seasoned managers understand how to tie inventory levels into profit and loss statements, shrink, and marketing plans.

• Don't let inventory collect dust.
• Don't run out of fast turning inventory
• Make sure your inventory leaves the shelves.

Those three basic rules are easy to grasp, useful to know, and are the cornerstone of advanced planning and forecasting. They may be all you ever need to understand if you own a corner store, but those rules won't take you much further than that without more analysis. To use more sophisticated inventory control techniques, you're going to need real inventory visibility.

The Ebb and Flow of Inventory

It doesn't matter if you're dealing in sheet metal, steel pipes, electronics accessories or parts replenishment: your inventory needs ebb and flow according to the demands of your market. For consumer outlets those ups and downs are often seasonally predictable and easy to confirm: electronics sell big for the holidays, vacation gear for the summer, and new clothes fly off the shelves come autumn, for example.  Other businesses also have inventory cycles, but they aren't as clearly visible, at least to the naked eye.

A customized planning module takes the guesswork out of inventory forecasting. Instead of just identifying the safe minimum and maximum levels for various stock materials, this unified system allows you to peer inside the process and get real visibility into what's going on with your inventory.

Example:  Visibility into Spatula Inventory

For example, let's take a look at a fictional company that was created for the movie "UHF", Spatula City. In addition to having retail outlets which sell the largest variety of spatulas available worldwide, the company is also a spatula manufacturer, and works with both materials providers and spatula artisans the world over.

Spatula City has just implemented an inventory planning module with Coastal Range Systems. Now, instead of simply being able to track the materials cost and profit margin for each kind of spatula, those data are fully integrated with labour, shipping, forecasting, and other components of the business systems. The CFO is able to recognize that mahogany-handled spatulas, long considered a holiday staple, actually sell more leading up to Valentine's Day. On the other hand, while the company's sand-proof beach spatula is a popular summer item, the amount of labour expended on assembly actually means that they're losing money on the item.

The newly-visible inventory data are used by the company in its negotiations with the Federation of Spatula Testers, when setting prices for line of spatulas in manufacturers exclusively for big box outlets and for developing long-term marketing strategies to gain market share from meat forks and egg timers.

Better Visibility for Better Planning

Increased visibility into inventory means better planning overall. Real-time reports that show what materials have arrived, what's been assembled, and what's been shipped can be correlated with labour, market trends, and material costs to help form intelligent, cohesive strategies. Simply stated, visibility replaces the guesswork and conjecture with hard data.

If your inventory management doesn't provide as much visibility as you'd like, contact us for a free assessment of your situation!