Don’t drive around in circles
A kindly warning for our readers.
Don’t start your project without strategy. It’s a sure-fire money pit. Off-the-cuff inventory management will cost you in unexpected labor and rework. After hitting few stumbling blocks, one of our clients was using internal resources to manage inventory, while simultaneously paying a vendor to do the exact same job. Crazy, but not uncommon. We’ve also had multiple clients come to us after wasting so much on poor data management, that the cost of maintenance superseded the value that the data brought in. Sad news when you end up working for your data, instead of having your data work for you. It’s like a scary scene from 2001: A Space Odyssey: it ain’t pretty, and it’s bad for business.
Inventory management strategy must align with overall business strategy. So take a step back and think big: What does successful inventory management look like? How do you define it? Is your main goal to maintain key equipment and minimize unnecessary inventory? Or is it to have a reliable system with easily identifiable and retrievable data? Whatever your goal is, first think of that big picture. Then break it up into short-term goals. This will help you measure performance, and give you the clear visibility needed to drive great inventory management.
Don’t sweep it under the rug
It might be simple; it might be complex. But everyone uses some type of system to manage inventory.
From spreadsheets to web-based management tools, pros rely on the data in these systems for financial reports, tax payments, and inventory health. Many users heavily focus on the physical management of inventory. Of course, it’s key to maintaining operations; however, it does not make physical tracking more important than keeping an updated system. If system managers fail to maintain an accurate and up-to-date inventory system, business users will stop relying on it for their inventory management, and you’ll end up with a pile of individual excel files spread out over the company. Pretty cringe-worthy. And it leads to a major lack of overall visibility of real managed value and metrics. Think about putting controls in place to make sure people are transacting within one consistent system. We’ve found that having system-generated notifications, or approvals for certain transactions (ie: physical movements of inventory require an approval from a material coordinator), can be a big support. But think about what ideas would make sense for your company.
Remember that time at the end of the year… You know, a few years back, when you and all your co-workers were under pressure, trying to reconcile inventory and finances? You know how you wished you had a cleaner and standardized inventory system
that would make this entire activity easier? Maybe you could have actually enjoyed spending time with family and friends during the holidays. Or, heaven forbid, even get a little bit of sleep.
Don’t forget that feeling. This is what happens when you fail to maintain a clean and updated inventory system. It gets in the way of the good stuff. When your inventory management is smooth, you can let work be work. That way you can live your life. Which is what this is all really about, anyways.
Don’t let me down
Many of the common issues of inventory management come from people. Now, it’s pretty rare that people screw things up on purpose. The most common reason is usually bad communication; it’s a little thing, but it wreaks such havoc, and can be as deadly and common as the flu.
We strongly recommend that you do an in-depth analysis of current systems of hierarchy, and methods of communication within your team. Ask yourself, “Does your team have clear visibility of roles and responsibilities?” “Do they know what you expect from them on a daily, weekly or monthly basis?” “Do they have the right tools, knowledge, or training to do what they need to do?” If you notice gaps or weak spots in your answers, take immediate action. Your employees and your bottom line will thank you.