Common Inventory System Problems & Solution Essay

SymptomsPreoccupation with the compute within the execution time frame. Typic on the wholey, companies begin altering their forecast precaution processes when addressing show chain performance. But this is unwise without understanding the nature of your demand and the reference ca dos of forecast erroneous beliefs. When forecast accuracy is everyplaceemphasized, fill rates and record turns feignt remediate, even when forecast accuracy does. No measure of guest service or register turns. Customers must be satisfied on an ongoing basis for a go with to achieve long-term sustainability.Yet, store managers often take a leak no idea how well customers needs argon being met. Similarly, without knowing how quickly inscription moves through the value-creation-and-delivery system, a political party wont be able to manage breed levels. quotidian planning is based on a back stage report. This is an unaccompanied reactive model. Todays fast-paced marketplace requires proacti ve inventory planning to meet current demand. Customers get out switch to a competitor if their needs are consistently unmet in the time frame they dictate.Solutions obligatory tracking of fill rate and inventory turns for every(prenominal) product lines. crossing managers should know these measures at all times. Fill rate should be mensurable daily, while inventory-turn measures will vary based on sales and action cycles. The important thing is that managers are both tracking and working to improve these rates. Develop realistic forecast-error measures. Developing realistic measures for how much forecast error you burn tolerate without a SKU stock-out is essential. Typically, companies estimate plus or subtraction 10 for this measure, which equals well-nigh two days worth of inventory-a miniscule count considering that companies often aim weeks or months worth of inventory. Effective forecast management and inventory planning require accurate data, so accurate forecast err or measures are a must.Mistake No. 2 Having unmodified employees manage inventory SymptomsA sentiment that our business is different because (fill in the blank). Every company has inventory planning challenges, such as variant demand. No business is so different that it would not benefit from strategicinventory management. Decentralized inventory management. If warehouse managers, office clerks, and other employees without particular proposition inventory-management procreation are making inventory-management decisions, then it is certain that wasteful inventory is piling up throughout the system.Usually, this model reflects a company with no clear goals or strategy for inventory planning. Lack of formal training program or professional peer interaction. Inventory management is a professional skill that requires upfront and ongoing education. Emphasizing buying over planning. Buyers make purchases, but planners make strategic decisions to meet goals. Thinking of inventory plannin g from a purely buying point of view promoter opportunities for improvement and financial benefits will be overlookeddaily. SolutionsRecognize that inventory management requires professional job skills, and mesh and train accordingly. Just as a company with hundreds of thousands of free dollars on its balance sheet would hire professional investment advisers, a company with hundreds of thousands of dollars in inventory should have professional inventory managers. Assign accountability for inventory management. Often, companies stinkert answer the question, Who is in charge of making sure inventory levels bear strategic goals? If no one is, then these inventory planning goals will never be met.TOP 5 SOLUTIONS1. Use grade points on inventory items to keep purchasing streamlined and inventory manageable. Reorder points (otherwise know as min. and max. levels) are the best method for making sure you have the right amount of inventory in your warehouse at all times. If you have too petite inventory you could lose out on sales, but if you have too much your cash is tied up in inventory that will not be sold. One of the biggest problems many another(prenominal) companies have is managing their cash. A quick way to solve that from an inventory bandstand is by making sure you have set the appropriate reorder points for your business. 2. Spend bills on specialized training for mission-critical parcel. Companies with a accord of inventory spend thousands of dollars on software product they need in order to manage and track their items asthey move all over the world. This software manages millions of dollars worth of assets. After spending so much money on software, some companies dont want to spend a a few(prenominal) thousand dollars extra to buy the specialized training they need to mechanism the software.This is a big mistake because this software wont do you any good if you dont spend a little bit more to learn how to use it. If you try to learn your so ftware on your own you may suffer for months before you learn the bedrock of how it works. 3. Rearrange the warehouse to set up for beaking efficiencies. Sometimes trainers put one across mistakes that are so obvious you would think theyd be turn immediately, but warehouse managers may be too distracted to calling card them. We often see 100,000-square-foot warehouses that are organized inefficiently. These companies could save themselves large sums of money by making a few changes to where they place their inventory. The items that you sell the nearly or send out the most should be right conterminous to the shipping dock. This keeps your employees from having to walk all the way across the warehouse to pick them up every time you are going to send them out. As companies grow, sometimes they just randomly put things where there is space.This works for a little while, but as you grow you need to think rough efficiency because the minutes that your employees spend driving arou nd the forklift cost you money. 4. give in time to get to know your technology so that you can use all the functionality. Rarely will a company use all of the functionality their software provides. Most of the time there is more that the software can do for you that you havent explored. Software companies always hear from their customers about which features they want added to the software when a lot of the time the features are already there. The more features that you use in the software the more effective you can be in managing your inventory. You should either assign someone within the company to learn the software functionality or pay someone to come in and teach it to you.5. Stop doing yearly physical inventories and move to a more regular, smaller cycle counting and reconciling routine. Businesses used to shut smooth for a day to a week each year to go into their warehouse and physically count everything to make sure that it matched the info in their software. This practic e is mostly outdated because of the amount of time and money it takes. Doing these checks in smaller, more regular cycles keeps a company from having to shut down. We recommend cream one section each day to checkyour product levels against the information from your inventory software.