The most critical cog in the wheel of Inventory efficiency? That has to be warehouse management. After all, everything that happens in Inventory occurs under the warehouse roof, right? That’s true only if you limit your view of Inventory to the warehouse. Successful companies realize that in order to have a smooth-running and efficient Inventory operation, it’s essential that you have the cooperation of other departments and areas in your company.

Inventory operations over the past few years have become an area that can make or break a company’s profit margin. Inventory used to get fairly low priority: As long as there was enough stock on the shelves to get the job done, there was very little accountability otherwise.

Now, more and more companies are waking up to the fact that Inventory must operate at optimum standards, and that means more than just warehouse management.

In an Aberdeen Group survey of technology plans adopted by distribution companies, warehouse management finished at the bottom of the heap:

• Inventory optimization: 42%
• Supply chain visibility: 42%
• Demand management: 38%
• Sales and operations planning: 32%
• Supply chain network design: 25%
• Warehouse management: 21%

 Two types of businesses were surveyed: distribution centered, and service centered. Companies were also surveyed on the key steps they’d taken to lift Inventory management to the next level:

• Optimize how much and where to hold Inventory: distribution centered, 76%; manufacturing centered, 66%
• Improve forecasting accuracy: distribution centered, 62%; manufacturing centered, 44%
• Improve replenishment strategies: distribution centered, 51%; manufacturing centered, 43%
• Improve Inventory/supply chain visibility: distribution centered, 38%; manufacturing centered, 29%
• Improve ability to meet customer-requested order dates: distribution centered, 31%; manufacturing centered, 38%

 There are a couple of tried-and-true techniques you might want to examine to achieve some of these goals.

One Logistics Manager set up a vendor-managed Inventory program with one of their important customers. Now, his company doesn’t have to worry about not having enough product when the customer needs it — or getting stuck with a surplus.

Another key element is consolidating different supply chain operations. Some companies have set up a series of supply chain operations to meet different needs in different areas of the company. In order to be successful, all of these smaller operations need to be consolidated, where one person can identify oversights and inconsistencies.

This problem isn’t going away.

Supply chain and distributions networks will become even more critical as fuel costs continue to rise and force more companies to evaluate what they’re doing. 

Tags: forecasting, inventory, purchasing, supply chain