During times of uncertainty, such as those that we are experiencing now, it is more important than ever to be able to adapt quickly to any changes that take place. Being able to adapt is possible if you have the right inventory management solution in place.
Starting A New Business
While it might seem counter-intuitive to be starting a business during the Coronavirus pandemic, there are still market opportunities. The same issues still affect new businesses now as they did before such as building market share, setting up shop (probably online), finding staff, choosing product lines and then attracting customers.
Once this period of your business settles down, you may need to look into scaling up, expanding into other markets, building customers and more.
Growing your business may involve:
- Expanding into new locations
- Selling more online
- Taking on new product lines and suppliers
- Creating more robust alignments with suppliers
- Developing a ‘leaner’ inventory approach (i.e., reducing inventory levels while minimising stock-outs).
- Finding new ways to drive costs out of the distribution process
It is during this phase of your business planning that you need to be investing in the right inventory management solution to meet your current needs, and adapt to any changing needs as your business grows. That technology needs to be flexible, scalable, adaptable and cloud-based.
Easing Distributor Pain Points With Technology
As a distributor, one of your goals is achieving optimal inventory levels, but this is a delicate balance. If you buy too little, you end up with stock-outs, buy too much, and your carrying costs go up.
By implementing the right technology, you can put in place a good management strategy that satisfies customer demands, while also reducing (or eliminating):
- High inventory costs
- Uncertainty due to fluctuations in demand
- Risk of loss
- Inventory turnover rates
- Unnecessary order duplications
- High levels of working capital tied up in inventory
- Excessive storage costs
- Imbalanced shipment lead times
- Lost customers
- Loss of materials due to carelessness or pilferage
These problems can contribute to substantial financial losses for your business. But the good news – they can be avoided using a scalable inventory management platform that provides information in real-time.
This includes product ordering, storage and control, ensuring you have the right quantities in the right place at the right time. You can monitor the movement of every product from distributor to end-user, with detailed record-keeping provided for every product.
The History Of Good Inventory Management
If you leave your inventory management to chance, it will not only tie up cash in your business but will likely have negative financial consequences for you.
For example: when you overstock in anticipation of future demand, you take the risk that your business is left with ‘dead stock’. This consumes working capital and also uses physical space just sitting there. There is no guarantee that you will be able to move these products in the future.
On the other hand, if you don’t hold enough inventory, you risk running out when your customer’s ask for the goods. This has now left you with lost business and unhappy customers, who may choose not to buy from you again.
In the past, companies have tried to avoid either of these two scenarios by performing physical warehouse counts, which are then reconciled against paper or batch-based systems. Most businesses would perform these checks on a scheduled basis, using the results to updated inventory figures.
The Problem With Out-Dated Technology
You’re all too aware that at some point, your business will outgrow the technology you started with. Whether you are looking to upgrade as your business has grown, or are looking to integrate systems.
Here are some telltale signs that your inventory management system isn’t working:
- Complicated, time-consuming inventory reconciliation process.
- Overstocking to ensure that the right amount of product is on-hand when needed.
- Always having to manually change physical counts to reflect actual in-stock positions.
- Mismanaged inventory levels
- High levels of human error (i.e., due to manual data entry processes).
- Inability to handle an increased number of stock-keeping units (SKUs) as your distributorship grows.
- No metrics to leverage to confidently optimise inventory.
- Too much obsolete inventory in the warehouse or distribution centre (DC).
- Poor demand forecasting.
Whatever the reason, the last thing you want is to be spending time and money manually changing all this over. You also can’t afford to work with a solution that doesn’t adjust to your current and future technology needs. For a company that is growing, the right technology can help gain better economies of scale and improve processes with less human labour.
These days, scalable software exists to do all of this for you, updating in real-time with information readily shares with all users and stakeholders across multiple business units and locations.
Introducing Scalable Software
When it comes to the software realm, the word ‘scalable’ refers to the fact that the system doesn’t need to be redesigned to maintain its high performance when its workload increases.
Whether your business is growing and you have more users on the system, or there is a need for higher storage capacity or any other event that pushes the software past the capacity it was introduced in, the software will change with your company.
There are so many benefits that come with this. If you are just starting or moving into a new market, you can choose a scalable inventory management solution that provides what you need at that point in time. This lowers your costs and means less user trainer. As you grow, the software will adapt to your business. It keeps the complexities to a minimum while leaving the door open for changing requirements – all without a high upfront investment.
When it comes to introducing scalable software into your business, the idea is to walk, then crawl, then run. Using a step-by-step approach, you will be building your inventory management system on a strong foundation and set yourself up for future success in the process.
Once in place, you will reap the benefits of full visibility into your inventory, affording you the ability to make fast, accurate decisions in regards to the allocation of orders and products. To find the right inventory management system for you, it’s essential to assess your current needs and plans for future growth.
Here are some key questions to ask:
1. What are we using right now, and how is it working for us?
2. What are our current solutions’ limitations?
3. What will we need one to five years from now?
Whether you are just starting, or are looking to branch out into a broader market, an automated inventory system that you can build upon along the way will make all the difference.
Armed with accurate inventory data that is recorded, tracked and optimised, enables you to reduce costs, minimise waste, meet customers’ expectations and predict future demands. You can protect yourself from fluctuations in demand, reduce the risk of loss, minimise administrative workloads and avoid ordering duplications. Most importantly, you can ensure your customers get their shipments on time, which is a must for any growing distributor.