Just how good is your inventory anyway? Is it right up there with the best? Are you using a lean inventory management system to ensure that you know exactly what you have and when you need to order more? Or is it… creaking? Is it tired? Is it more work than it needs to be? If that’s the case then a new system could be exactly what you need. The benefits of lean inventory management are vast, so understanding the full scope of opportunities available to your business is key.
Read our guide to get a full understanding of:
- The Benefits Of Lean Inventory Management
- How Lean Inventory Management can cut costs
- How does ERP Help in Inventory Management?
- Managing your Suppliers
Having the right inventory management system to ensure you can employ lean inventory optimisation is vital for any stockholding business. If you don’t know what stock you have (or you don’t know with any surety), you could have many thousands of pounds sitting in your warehouse, being wasted. Or you might be so low on stock without realising that you are on the brink of disappointing many customers. It’s hard to pull yourself back from that kind of problem.
Inventory Management and Holding the Right Stock Levels
You need to hold enough stock to process orders smoothly, but not so much that you waste money and have to sell it all off cheaply. This is where lean inventory management comes in. Using this method reduces the time taken to forecast and manage inventory, allowing you to deal with other aspects of your business without the concern that low stock (or too much of it) can bring.
What Are The Main Benefits Of Lean Inventory Management?
Lean inventory management – the process of ensuring that your stock levels are at exactly the right level for your business to run smoothly and cut costs – has many benefits, which is why it is recommended as a practice for businesses of all sizes. After all, who can afford to have thousands of pounds worth of stock doing nothing except taking up space?
Increase Customer Satisfaction
The first benefit of lean inventory management is increased customer satisfaction. With the right stock levels, you can under promise and over deliver every time. This is the first step to ensuring your customers are delighted with the service they receive from you. The happier the customers, the more likely they are to come back to you. If you have new competition on the horizon, it’s even more important you get this right. As an additional benefit, those happy customers will want to tell their friends and family about the great service they received from you – and all because you practice lean inventory management.
Protect your margins
Another benefit of lean inventory management is better financials. You can release working capital that would otherwise have been spent – unnecessarily – on stock. You can also ensure that your margins are improved as you’ll need to sell off less old stock to make room for new (or simply to get rid of inventory that isn’t selling).
Lean Inventory Management to cut costs
As with any kind of automation, once it’s up and running, you can drastically reduce your admin costs. And, when you need to, you can really make the most of any supplier discounts and incentives because you’ll have the money and the room to take on whatever is on offer (although beware: only buy what you know you can sell, otherwise everything you worked out regarding your lean inventory management levels will be undone).
Gain Greater Insights
Benefits abound with lean inventory management: you can also get a much greater insight into your business using this method of stock control. You can have more freedom and flexibility to choose the suppliers that are best for you and that offer the best deals on the products you want to buy.
Improved Reporting Accuracy
Finally, when you are able to report accurately on your stock levels, you can see quickly and easily where you need to improve. What should you be advertising more? What’s selling and – perhaps crucially – what isn’t? Use the details you are being given through the lean inventory management system to streamline your processes and your business.
How Does ERP Help in Inventory Management?
With the right ERP solution, you can always be confident that you are making the right choices when it comes to your inventory. User errors aside, the right system will ensure you’ll never over or under order again, because you’ll always be able to have complete faith in the stock levels you can see. It’s automated, so it’s accurate.
Empower your business with data insights
Another way that ERP is going to help your lean inventory management is by giving you access to historical data. You can use that data to determine how you are going to build your business, and instantly identify what is potentially slowing you down.
If, for example, a customer has been increasing their order with you month on month, and you fail to notice and therefore fail to order in enough of the goods they want, you are going to disappoint them not once (which is bad enough) but many times. Potentially, forcing them to stop ordering from you altogether. Maybe even leaving a bad review as they head off to your competitors. If you can identify this issue, you can pre-empt it by ensuring you have enough stock month on month.
Managing your Suppliers
ERP systems can also help you to keep inline with any rules suppliers may have regarding ordering. For example, last order dates, minimum numbers, discounts on bulk orders etc. This way, you can make the ordering process much quicker, getting it right first time. You can also prevent any potential delays as you go back and forth trying to get it right.
Monitor Supplier Performance
On the opposite side of this coin, another benefit of lean inventory management enables you to monitor your suppliers’ performance. Identify those suppliers who are consistently late, or who chase for payment on a certain date. Having this information to hand can help you to pick and choose which suppliers to use at any one time. Ultimately, giving you control over your lean inventory management systems.
Speak to Xpedition today and discover intelligent solutions to help your business profit from the benefits of lean inventory management. Or, read our recent blog on the benefits of ERP to find out more. Our Wholesale and Distribution experts have years’ of experience in the industry and with Microsoft Dynamics 365 Business Central we have the perfect solution for your business.