Technology-embedded Supply Chain is imminent for business survival and growth.
CAGR predicts the Global Supply Chain market to grow by 16.0% between now and 2025.
Staying competitive requires use of the right tools and systems. One critical component in a successful enterprise is proper Inventory Management, which is best achieved using a Warehouse Management System.
Benefits of Inventory Management through Warehouse Management Systems
- Maintain accurate inventory visibility
- Avoid financial discrepancies
- Optimize purchasing
Attain Inventory Accuracy and prevent Inventory Loss:
No matter how large/sophisticated the inventory or how many locations it is spread over, Warehouse Management software provides an accurate count of what is on hand.
Warehouse Management software with barcode-supported verified fulfillment can provide inventory counts with greater than 99% accuracy, even for millions of products spread throughout multiple warehouses.
Warehouse Management software also supports auditing activities to verify inventory accuracy. Advanced software supports traditional physical inventory audits where all inventory is counted at once, as well as cycle counting, which involves auditing portions of inventory in certain locations for less disruption to daily operations.
Inventory Record Accuracy (IRA) is a measure of how closely official inventory records match the physical inventory. Cycle Counting is an effective tool for maintaining a consistently high Accuracy of Inventory Record.
Why is Inventory Record Accuracy Important?
The two main reasons to have Accurate Inventory Records are Financial and Operational.
- Investors want to know that the book value is accurate.
- Poor accuracy begets more inventory and requires more capital. Inventory is often the largest consumer of capital for an enterprise.
- Stockouts interrupt production and create delivery delays.
- People waste hours looking for misplaced or missing items.
- When stockouts are frequent, inventory rises to compensate. This unnecessary inventory requires space and capital.
- MRP and ERP systems require very high accuracies (95%-99%) to function well.
What is Cycle Count?
Cycle counting is a periodic counting of inventory within a warehouse to ensure that the physical inventory of each bin location matches the count reported in the warehouse management system.
Cycle count helps the Warehouse Manager to double check the Accuracy of Inventory in the Warehouse. A periodic counting maintains accuracy of inventory count and on-hand quantity available. Any mismatches are updated in the ERP System.
Cycle Count also helps the user to record the Quality of product and mark it as damaged if the inventory is damaged inside the warehouse. This can then be noted in both the Warehouse Management System and the ERP System for tracking purposes.
When Cycle Count is periodically executed, the Inventory in both systems remains synced and accurate, which enables users to fulfil the order on time. The business then improves its ability to deliver on time.
The Importance of Cycle Counting
Improved ability to fill orders: Because cycle counting allows smaller batches of goods to be counted multiple times a year, inventory variances in the ordering system are reduced. As a result, there are fewer items on back-order.
Reduced Errors: If by any chance the inventory is not accounted for correctly, it is easier to catch the error by way of cycle counting. Cycle counting improves the accuracy of inventory records.
More Confident Buying Decisions: As the Exact Inventory count is assessed regularly, cycle counting ensures much more targeted and informed purchasing. Hence, cycle counting avoids stock outs ahead of time and creates accurate reports for the buyers on your team.
Prevent Inventory Loss:
Inventory shrinkage is something that retail companies are wary of. It can be caused by several factors such as theft, damages, spoilage, or administrative errors on stock movements. For you to prevent inventory shrinkage, you need proper Warehouse Management Systems & Inventory Management strategies. These strategies include the following:
- Create a Barcode & SKU Number for Each Item:
Barcodes and SKU numbers on your items are very helpful for inventory tracking. Labeling your items helps ensure all items are well recorded, thus avoiding inventory loss. Barcodes are essential for inventory visibility.
- Keep Track of Your Inventory Levels:
Monitoring inventory levels periodically helps to reduce inventory shrinkage. Set thresholds with a minimum level of inventory for each product to ensure inventory replenishments as needed. Overstocking should be avoided, since storing excess inventory can lead to damage, decay, obsolescence, and more issues.
- Conduct Regular Inventory Audit/ Cycle Count Procedures:
Compare the stock available in physical locations such as the warehouse or store with the stock recorded in your accounting system. Make sure there are no differences between the physical inventory count and the accounting records.
Successful global supply chain networks must adopt effective strategies and technologies to thrive. Implementing Inventory Management with a Warehouse Management System (WMS) helps organizations to prosper in their business. Those that do not track their inventory properly risk losing a lot.
Team up with ITOrizon to learn more about streamlined solutions that can help your business to reach its full potential.