Inventory management is how companies organize inventory throughout their supply chain. From raw materials to parts to finished goods, a well-functioning supply chain depends upon a well-stocked inventory.
Unfortunately, managing your inventory levels can sometimes feel like a delicate balancing act. From small businesses all the way up to multi-billion dollar asset-intensive industries like power generation or resource extraction, doing a good job managing inventory is absolutely necessary, and one of the keys to success in modern business.
Inventory management is so important because with too much inventory, you can handicap your organization by locking up valuable working capital that might be better used elsewhere. In addition, more inventory generally requires more space, more labour and greater costs.
On the other hand, with too little inventory in stock you risk facing lost sales, encountering costly supplier or transportation-related delays, and facing the consequences of operational bottlenecks.
Ideally, your inventory management system should provide a solid inventory mix and ensure you always have what you need to support your ongoing operations.
Where Should I Start?
To improve inventory management, you might be tempted to do it all using what is essentially an Excel spreadsheet, or a combination of spreadsheets. This is not a good idea, as technology and sheer necessity has put those days decidedly behind us.
Not only does inputting and updating data using an outdated approach usually have to be done manually, it’s a long-term recipe for disaster, especially given the extremely complex nature of modern supply chains. Add in the fact that many ordering values (such as Mins / Max and lead times for inventory items) are often only set during system implementations and never revisited, and your company could have a big problem on its hands in terms of inaccurate information.
Today, you need an analytics approach that takes a unified view of your data management, one that involves a better strategy, more automation and less need for costly human intervention. When you operate from a single platform or using a unified inventory management software and the most modern inventory optimization tools, you end up with a much simpler view of your inventory, your costs, and your real-time needs.
The right inventory management tools will help you better understand both your demand and supply variability as well as up-to-date financial data. It will also allow you to have more accurate replenishment parameters in order to determine how much inventory to hold for a given tool, machine piece or sub-component.
What it all adds up to is more information, more accurate data, and more opportunities to deliver cost savings and reduce overall downtime – a key component of boosting your company’s bottom line.
What Technology or Inventory Management Software Should I Use?
Every business is different, and as such, so will their ideal inventory management approach. However, some of the questions that will need to be addressed in any industry are the following:
- Are my Finance Department, Maintenance teams and supply chain well-connected?
- Are my inventory targets realistic? How do we make replenishment decisions?
- How do we measure performance, and is my backend data clear and well-structured?
- How do we identify trends or gain insights from our data?
- Are our operations exposed to any outsized risk?
If some of the answers to these questions are unclear or unsatisfactory, then it’s time to make a change. Sometimes your best bet is not to try to figure it all out yourself, but instead to reach out to experts that specialize in improving inventory management practices.
Companies like Xtivity can help your organization get a better handle on its inventory management process by using a suite of sophisticated and collaborative tools and processes. These are designed to not only enhance data integration and analysis, but also optimize recommendations, help improve parts review / approval and that can upload seamlessly back to your existing Enterprise Resource Planning (ERP) or Enterprise Asset Management (EAM) systems.
The Advantage of Using an Inventory Management System
Ultimately, the benefit of using an inventory management software for your business will center around two key elements:
- Eliminating or reducing waste
- Reducing variability and unpredictability
Companies like Xtivity can help your business better define the problems that need to be solved, measure the current state of affairs, analyze an improved data flow, and implement a plan based on the results of the analysis.
By better understanding and controlling inventory data, you’ll be well on your way to achieving quantifiable results. And with the right inventory management improvements, this process can be repeated regularly so that your information is always accurate and doesn’t depend on costly and potentially inaccurate manual processes.
Ultimately, adopting a cloud-based inventory management system – especially for asset-intensive industries, can provide a number of advantages, including:
- Up to a 15% reduction in moving inventory value over the first year
- Cash flow improvements (as a percentage of inventory reduction) of up to 50%
- Improved inventory availability and reduced downtime through improved part availability
- Improved parts inventory performance visibility using customizable reports
- Less administrative time through machine learning and targeted reviews
- And much more
Take Control of Your Inventory with Xtivity
To improve decision making, improve asset uptime & reliability and better allocate your organization’s capital, trust Xtivity to get you there.
Not only can they help with an inventory management system or streamline your supply chain, they can also offer advice and guidance on procurement master data management strategies, improve governance processes and supplier relationships, generate optimized results across your organization, and much more.