As we discussed in our previous blog, maintaining the right inventory at the right time is important for your profit margins and customer satisfaction. A weak inventory management system can be costly for several reasons. Below, you’ll find 5 ways to improve inventory management to maximize profits and strengthen customer relationships.
Optimize Inventory Management
Like many industries, economic conditions and customer demands are putting increased pressure on profit margins. Having the right inventory and meeting customer needs is important for success in the steel and metals business sector. Businesses often ride that fine line between a profitable project, breaking even or incurring a loss.
If you can measure it, you can improve it. This adage especially applies to inventory and here are some ways to do it successfully.
- Deploy the right technology: Not all business management systems are created equal and this is especially true for the steel and metals industry. Finding the right business management system is essential. The right solution will include business intelligence and optimization tools that will make it easier to track real-time inventory and identify trends. The more you know about inventory, the better you can track it and make procurement decisions that improve profits.
- Know your inventory: Not all inventory should be treated the same. Like many businesses, you likely have top-selling products and less popular items. As such, you’ll have high moving, high volume inventory in contrast to slow moving, low volume items. Choosing which items to stock, in what quantities and when to stock them is important for many reasons. As we discussed before, you want to avoid stock-outs, but not overstock the warehouse. You want to maintain healthy quantities of inventory, without stressing working capital.
- Know your suppliers: Just like customers rely on you to deliver products, you rely on your suppliers. A strong business management solution will offer the ability to monitor a supplier’s reliability through tracking receipts and information such as date ordered and received, quantity ordered and received and the condition items were upon delivery. Once you determine a supplier’s reliability, you can use this information to negotiate supplier relationships, as well as plan production accordingly.
- Traceability: For certain products and customers, tracking traceability is important. A modern inventory solution will support traceability with barcoding or RFID in combination with powerful reporting features. This technology provides the ability to track raw materials, assemblies and finished products. In the case of a recall, you can track any product and take quick action whether it’s in the warehouse or already shipped to the customer.
- Slotting: One way to improve productivity alongside inventory management is to focus on slotting. Storing inventory in areas that are more accessible and minimize traveling distances will reduce labor and improve efficiencies. This is a simple activity that can be done on a regular basis.
Strengthen Inventory Management with Modern Technology
Having the right inventory at the right time is essential to improve profits and strengthen customer relationships. In the steel and metals industry, choose an inventory management solution that will support many product variables, and includes built-in business intelligence and traceability features. Let us know if you have any questions or need advice on other ways to improve inventory management.