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How do you update your inventory management techniques for changing markets?

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Inventory management is a crucial aspect of manufacturing operations, as it affects your production efficiency, customer satisfaction, and profitability. However, inventory management techniques are not static, and they need to adapt to changing markets, customer demands, and supply chain disruptions. In this article, we will discuss how you can update your inventory management techniques for changing markets, and what benefits you can expect from doing so.

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1 Assess your current inventory system

Assessing your current inventory system and identifying its strengths and weaknesses is the first step to updating your inventory management techniques. Evaluate how well your inventory system matches your production goals, customer expectations, and market conditions. To do this, ask yourself questions such as how accurate your inventory data is and how often you update it, how you forecast inventory demand and supply, how you optimize inventory levels to avoid overstocking or understocking, how you manage inventory costs and risks, and how you track and measure inventory performance and efficiency. Answering these questions can help you pinpoint areas of improvement and opportunities for innovation in your inventory system.

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Utkan Ekinci

Founder at Arkhon Optima
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Two procedures must be definitely combined when determining a company’s inventory policy. ? Safety stock: Setting a safety stock that absorps demand and supply deviations, and complies with the identified CSL (customer service level) targets. ? Optimum order quantity: Carrying out the production according to the parameters such as MPQ (min production quantity), batch size, EOQ (economic order quantity). Both parties should be addressed through unified supply model. Thus, a unified supply policy is created, which leads to an operations management with high efficiency.

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2 Adopt a lean inventory approach

The second step to update your inventory management techniques is to adopt a lean inventory approach, which aims to minimize waste and maximize value in your inventory processes. This includes eliminating excess inventory that does not add value, reducing inventory holding costs and storage space, improving quality and reducing defects and errors, streamlining inventory flow and reducing lead times, and enhancing inventory visibility and control across your supply chain. By doing so, you can increase production efficiency, customer satisfaction, and profitability, while making your inventory system more agile and responsive to changing markets.

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3 Implement inventory automation and digitalization

The third step to update your inventory management techniques is to implement inventory automation and digitalization, which can help you optimize your inventory operations and enhance decision making. This could include leveraging software and tools to automate tasks, integrating your inventory system with other business systems, utilizing data analytics and AI for demand and supply insights, adopting cloud-based and mobile-based solutions for anytime access, and using smart technologies such as RFID, IoT, and blockchain to track and secure assets. Ultimately, inventory automation and digitalization can improve accuracy, efficiency, flexibility, and allow for faster adaptation to changing markets.

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Utkan Ekinci

Founder at Arkhon Optima
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The best way of improving the inventory is to take the road with the big three of supply chain management. If ERP, WMS, and APS systems are installed and integrated with each other, that opens the door for many more improvements. ? ERP enables the cross-system flow. It is the master in data accuracy, safety, and uniqueness. ? WMS manages the physical flow. All the products that are idle, aging on shelf or stored in the wrong location are detected. ? APS plans the future in line with the information reveived from those two systems. It creates scenarios and ensures optimum use of inventory and production. If anyone of the big three is missing or malfunctioning, then it’s time to ring the alarm. It’s not a good idea to anchor at full sail.

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4 Involve your stakeholders in your inventory planning

The fourth step to update your inventory management techniques is to involve your stakeholders in your inventory planning. This will help to align your inventory goals and strategies with your market needs and expectations. Your stakeholders, such as customers, suppliers, employees, and partners, can provide valuable feedback and input for your inventory planning. To involve them, you should communicate your objectives and expectations clearly and regularly, solicit their opinions and suggestions for improvement, collaborate with them to solve challenges, share data and insights with them to increase transparency, and reward them for their contribution. By involving your stakeholders in your inventory planning, you can improve performance and quality, as well as build stronger relationships with them.

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Utkan Ekinci

Founder at Arkhon Optima
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Inventory management is the most challenging and most criticized process of companies. Finance, production, and sales often complain about inventory management. The best thing that supply chain could do is to involve those departments in the game, rather than getting defensive. But, such a step requires attention. The subject is full of intensive and complex calculations. Involving those partners with quite limited information can cause catastrophic results. Best thing for supply chain department is to create scenarios with the help of a powerful APS, and to ask those partners to comment on them. For example; Need for investment? Such high-level topics are discussed in scenario studies. Those studies will help to make the plan altogether.

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5 Review and update your inventory policies and procedures

The fifth step to update your inventory management techniques is to review and update your inventory policies and procedures. Doing so can help you standardize and optimize your inventory practices and outcomes, while also ensuring that your inventory system is consistent, compliant, and effective. Your inventory rules, guidelines, and best practices should cover areas such as inventory ordering and replenishment, allocation and distribution, counting and auditing, valuation and costing, as well as reporting and analysis. Furthermore, these policies should be updated to reflect your current market conditions and requirements.

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Utkan Ekinci

Founder at Arkhon Optima
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If we go back to square one, we notice that demand templates must be renewed in a shorter time than production and supply deadlines. Thus, changing sales trends will be considered for calculations. In addition, deviations will be updated as well. Depending on the new forecast values and variance coming, when the unified inventory model is run, both safety stocks and the optimum order quantity values will be updated. Thus the company will be adapted to the changing market conditions in a shorter time frame than the deadline. Besides, it will be possible to identify over stocks and unnecessary storages and to take action. Without updates and reviews, our ship will be drifting in stranger seas, at the mercy of wind and current.

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6 Monitor and evaluate your inventory results and feedback

The sixth step to update your inventory management techniques is to monitor and evaluate your inventory results and feedback. This will enable you to measure your inventory performance and impact, as well as identify your inventory gaps and opportunities. You should collect and analyze data and feedback from various sources, such as inventory software, stakeholders, and market research. Metrics and indicators like inventory turnover and turnover ratio, accuracy and variance, service level and fill rate, carrying cost and total cost of ownership, profitability and return on investment can be used to monitor and evaluate your inventory results. By monitoring and evaluating your data, you can assess your inventory strengths and weaknesses, allowing you to make adjustments or improvements to your system as needed.

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7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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Anastasiya Kaltyhina

Head of Business Development
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? IoT Adopting IoT technology unlocks stock scanning functionality. This is one of the go-to options to automate and speed up warehouse-related operations, such as spotting low-stock items and replenishment. ? NFC? Near-field communication can be an alternative to IoT-based scanning operations. It enables staff to operate without WMS-specific hardware, such as scanners. ? Generative AI? If you want to optimize inventory, warehouse management, and last-mile delivery, weaving gen AI into your software is worth its while. It unravels capabilities such as intelligent analysis of demand patterns in different areas you operate and optimizing local inventory levels to cut down overstocks and stockouts.

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How do you update your inventory management techniques for changing markets?

1

2

3

4

5

6

7

1 Assess your current inventory system

2 Adopt a lean inventory approach

3 Implement inventory automation and digitalization

4 Involve your stakeholders in your inventory planning

5 Review and update your inventory policies and procedures

6 Monitor and evaluate your inventory results and feedback

7 Here’s what else to consider

Manufacturing Operations

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How do you update your inventory management techniques for changing markets?

1

2

3

4

5

6

7

1 Assess your current inventory system

2 Adopt a lean inventory approach

3 Implement inventory automation and digitalization

4 Involve your stakeholders in your inventory planning

5 Review and update your inventory policies and procedures

6 Monitor and evaluate your inventory results and feedback

7 Here’s what else to consider

Manufacturing Operations

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