From ASA Supplier Partner, WIPFLI (www.wipfli.com), in today’s competitive market, optimizing inventory management is crucial for mid-sized and larger companies. Inventory often represents a major working capital commitment, so improvements can significantly impact financial targets, customer service, and sales performance.
Here are four strategies to maximize your inventory investment:
- Process audits: Minimize handling of inventory to increase profitability. Conduct audits to track inventory from receipt to sale, identifying steps that add no value or cause inefficiencies. This can help eliminate waste and uncover hidden losses.
- Bill of materials (BOM) audits: Regularly review BOMs to ensure they reflect current product requirements and avoid costly errors from outdated information. Quarterly audits help keep your BOM accurate and relevant, improving inventory management.
- ERP system optimization: Ensure your ERP system provides accurate and timely inventory data. Optimize the system for your needs, ensure proper integration, and maintain accurate data input. For those still using manual tracking, consider investing in an ERP system and choose a vendor with relevant experience.
- Monitoring turnover: Track inventory turnover and days on hand to gauge efficiency. High turnover indicates effective inventory management, while low turnover may signal overstocking and tied-up cash. Compare your turnover ratios to industry peers to identify areas for improvement.
