How can you quickly improve yo...

How to Quickly Improve Your Inventory Management?

Inventory management is one of the key elements to optimize in order to increase your return on investment.

All the products and materials you purchase and store represent valuable assets: when your inventory is poorly managed, this investment can be considered wasted.

The more efficient your management, the greater your ability to meet demand while avoiding losses. But how can you quickly improve your inventory management? In this article, we present reliable and effective methods for better inventory management.

The Importance of Effective Inventory Management

Managing your inventory should be a priority. By optimizing it, you will reap numerous benefits that will impact the entire supply chain. Here's what you need to know about logistics inventory and the advantages of effective management.

What is Logistics Inventory?

You are legally required to count each item in your inventory at least once a year. This is called a logistics inventory. It allows you to accurately determine the difference between the items recorded in the computer system and those actually present in your logistics warehouse.

The inventory must be comprehensive and can include different types of items:

Raw materials;

All components used to produce goods;

Goods in production and therefore not yet available;

All products that can be sold;

All consumables;

All spare parts and components used for products requiring repair.

There are several ways to manage inventory, such as:

Cyclical inventory: products are not all counted at the same time, but on a rotating basis, for example, according to their storage location in the logistics warehouse;

Periodic inventory: you define a specific date on which you will carry out the inventory, for example, monthly or manually;

Perpetual inventory: also known as computerized inventory. Here, the inventory is updated in real time each time a stock item changes hands. However, this method can be unreliable since it doesn't account for things like theft. Therefore, a physical inventory count should still be performed occasionally to determine the difference between the actual stock and the theoretical stock recorded by the software.

Four tips to improve your inventory management

As we've seen, inventory management is crucial to your company's success. Here are four tips to optimize your management and maximize its benefits.

1. Optimize your inventory management processes

To optimize your inventory management, implement efficient stock management processes. You need to know at any given time which goods are in stock, where, how, and for how long, as well as the quantities requested and the specific time periods.

To control your inventory, you can use several methods, both manual and computerized:

Minimum stock level: You set a minimum stock level for each product. As soon as this minimum is reached, a replenishment request is sent. This is particularly useful for avoiding stockouts of goods in high demand or those that are regularly ordered by customers over time.

Inventory review: You regularly review your inventory to replenish all items whose stock has reached a predefined minimum.

Just-in-Time (JIT) inventory management: The goal of this method is to reduce costs by storing items in very small quantities. The idea is to only stock and supply what is needed, when it is requested. You therefore operate on a very lean system and must ensure that your suppliers will be able to provide you with goods almost immediately when needed. Economic order quantity (EOQ): This is a complex formula used to determine the correct volume of products to stock. Since this formula is very complicated to calculate, it is simpler to use inventory management software.

FIFO method: This is the English acronym for "First In, First Out," which is why it is sometimes called PEPS. It is particularly useful for perishable products or those subject to obsolescence. As soon as goods arrive in stock, they are recorded and made available for delivery.

Note that excellent inventory management