Inventory Management 101: Time to step up to the plate
Carrying excess inventory comes at a high cost, but so too do stock-outs and lost customers. Here’s how inventory management software is helping shippers bridge the inventory gap and come out ahead.
By Bridget McCrea, Editor · October 4, 2018
High inventory costs, constant stock-outs, low SKU turnover rates and getting stuck with too much obsolete inventory are just a handful of the challenges that companies run into when they don’t use good inventory management practices. In today’s fast-paced, e-commerce/omni-channel distribution world, any one of these challenges can have a negative impact on the bottom line.
However, achieving optimal inventory levels requires a delicate balance. Procure too little of a product and you wind up with stock-outs, lost sales or unhappy customers. Buy too much and your carrying and storage costs go through the roof right along with the number of obsolete products sitting on your warehouse or DC shelves.
“The problem we see most frequently with inventory is that companies have too much of it, and rarely too little of it,” says Ian Hobkirk, president at Boston-based Commonwealth Supply Chain Advisors. “We can show them, mathematically and six ways to Sunday, how to reduce those inventory levels, what the stocking levels should be for each SKU, and so forth. However, at the end of the day inventory is a security blanket that’s largely rooted in emotional decisions—logic just doesn’t apply.”
The good news is that this and other challenges can be avoided—or mitigated—by using inventory management software that provides inventory visibility on a real-time basis. By effectively removing the emotional component of inventory management, and putting real data and insights into a logistics professional’s hands, these platforms enable a more streamlined, optimized, reliable approach to inventory management.