How do you balance inventory management with other goals?

2 Use inventory models and methods

The second step is to use inventory models and methods that can help you analyze, optimize, and control your inventory decisions. Inventory models are mathematical formulas or algorithms that can help you determine how much to order, when to order, and where to store your inventory. Inventory methods are rules or policies that can help you manage your inventory operations. For example, you can use the economic order quantity (EOQ) model to minimize your total inventory costs, or the reorder point (ROP) method to avoid stockouts.

3 Implement inventory systems and software

The third step is to implement inventory systems and software that can help you monitor, track, and update your inventory data and information. Inventory systems are the hardware and software components that can help you collect, store, and process your inventory data. Inventory software are the applications or programs that can help you plan, execute, and evaluate your inventory activities. For example, you can use a barcode scanner to record your inventory transactions, or an inventory management software to generate inventory reports and forecasts.

4 Apply inventory best practices and standards

The fourth step is to apply inventory best practices and standards that can help you improve your inventory performance and quality. Inventory best practices are the proven or recommended methods or techniques that can help you achieve your inventory goals. Inventory standards are the norms or criteria that can help you measure your inventory quality and compliance. For example, you can use the ABC analysis to classify your inventory items based on their value and importance, or the ISO 9001 standard to ensure your inventory quality management system.

5 Integrate inventory with other functions and processes

The fifth step is to integrate inventory with other functions and processes that can help you create value and synergy for your business. Inventory is not an isolated function; it interacts with other functions such as purchasing, production, distribution, sales, and marketing. Inventory also affects and is affected by other processes such as demand forecasting, supply chain management, lean manufacturing, and customer relationship management. For example, you can integrate your inventory with your purchasing function to negotiate better prices and terms with your suppliers, or with your production function to implement just-in-time (JIT) inventory system.

6 Review and update your inventory strategy

The sixth and final step is to review and update your inventory strategy based on your performance results and feedback. Inventory management is not a one-time activity; it is a continuous process that requires regular evaluation and improvement. You should monitor and measure your inventory performance using key performance indicators (KPIs) such as inventory accuracy, fill rate, cycle time, and inventory turnover ratio. You should also solicit and incorporate feedback from your stakeholders such as customers, suppliers, employees, and managers. Based on your findings and feedback, you should update your inventory strategy to adapt to the changing business environment and customer needs.