You have an inventory management system in place. How can you make it work better for you?

1. Regularly Review and Update: Conduct a comprehensive review of your inventory management system to identify any inefficiencies or areas for improvement. By ensuring that all information, such as product descriptions, quantities, prices, and suppliers, is accurate and up-to-date. 2. Implement Automation: Identify repetitive or time-consuming tasks and automate them within the system. 3. Leverage Analytics and Reporting: Utilize the reporting and analytics features of the inventory management system to gain insight into inventory performance, sales trends, and profitability. Analyze key metrics such as, stockouts, and carrying costs to identify areas for improvement and make data-driven decisions.

The Solver add-in in Excel can be used for inventory management by optimizing certain parameters to achieve specific objectives. Solver is particularly useful for finding the optimal values of decision variables, subject to constraints, in order to maximize or minimize a certain objective. In the context of inventory management, you might use Solver to address issues such as minimizing costs, maximizing profit, or optimizing stock levels.

Forecasting tools should be used to forecast demand, which should directly influence inventory levels. It is important to estimate demand at the lowest level of detail and cascade inventory levels upward to distribution centers. It is also possible to estimate the stock level as an uncertain value in some ranges in order to use this in models. Also, demand may depend on the price of the product or the price of this product from competitors. Demand also changes depending on these parameters.

To meet business requirements, you should choose the model that best suits current needs. For some businesses, the current level of backorders might be a metric of interest, while for others, stockout costs may be relevant. Additionally, the available resources might drive the selection of the model. For example, if a warehouse relies on manual inventory counting, periodic review makes more sense than wasting resources on continuous review. On the other hand, if you have transaction managers in place, continuous review can be implemented. Sometimes, the SKU type might decide the model. For perishable items, the newsvendor model is suitable.

After building forecast models, there should be an understanding of the required reserves. Inventory storage has its own nuances related to the condition and volume of warehouses, logistics capacities and other restrictions. Within these constraints, it is necessary to find the best inventory configuration at each point in time. Also, if there are ranges for demand, you can use scenario modeling tools and build strategies like a trade market. You can resort to an aggressive, conservative or balanced strategy. The search for inventory levels for various scenarios will be done using optimization tools.

Be mindful of the kind of reporting tools that are at your disposal. Proper analysis is built from proper reports. If the data presented to you is not sufficient neither will your reports be to track trends, perform deep dives or discover process improvements. Remember that accuracy is key to any operation analysis.

Real-time Tracking: Ensure accurate levels and minimize stockouts. Demand Forecasting: Anticipate needs, optimizing stock levels. Supplier Collaboration: Build strong relationships for timely deliveries. ABC Analysis: Prioritize high-value items for efficient management. Automation: Streamline tasks like reorder notifications. Cloud-Based System: Ensure accessibility, scalability, and security. Integration: Seamlessly integrate with other business systems. Optimized Storage: Strategically organize inventory for efficiency. Regular Audits: Identify and address discrepancies promptly. Performance Analytics: Assess KPIs for data-driven decisions. Employee Training: Ensure staff is proficient in system operation.

You may have an inventory management system in place but do you have the right people in place to actually utilize the system the way it's meant to be utilize. You need the right people to learn the system and to follow processes that are put in place.