Running a business is a difficult endeavour even at the best of times. Right now, the UK economy poses an existential risk to many businesses, with operating costs set to rise exponentially in the coming months. As businesses prepare for difficulty, many are seeking to re-evaluate the efficiency of their enterprise.
When it comes to efficiency, inventory management is often the first subject raised. But why? And how can you improve your management of stock?
Why is Inventory Management Important?
Inventory management is a fundamental part of your business’ logistics side, enabling better control and administration of equipment and stock. Proper inventory management allows warehouse operatives to effectively and efficiently store materials and stock, and to easily access items as part of a simple, robust system of organisation.
Without inventory management, the resulting inefficiencies can cause the excess ordering of stock and a serious slowdown in the flow of goods through the warehouse. Bottlenecks can form, and businesses can be actively harmed as a result.
Principles for Effective Inventory Management
One of the first principles of effective inventory management is the ‘80/20’ rule. The 80/20 rule describes the notion that 80% of all results come from 20% of all causes; with specific regard to inventory, this means that 80% of any business’ income likely comes from 20% of its product or service range.
To this end, there is a small portion of the product range doing the majority of the profit-making. It stands to reason that these products should be more abundant, and easier to access and pack. This is where the second principle comes in.
ABC analysis seeks to ascribe value to items within your inventory, in terms of their demand from consumers and their relative risk to workers. Items that share a classification are stored together; A items might be cheap and highly popular items that make their way into every order, while C items may be much less popular, and safe to store at a height away from high-traffic areas of the warehouse.
Tools and Equipment
To effectively implement any changes to your existing inventory management system – and to remain flexible in terms of your potential future needs – you will need to have a cache of tools and equipment at your disposal. With the right items, you can ensure that your logistical needs are being met and that any potential warehouse issues are resolvable in-house.
For starters, your business will need a set of reliable power tools, including an impact driver and a lightweight powered driver for screws. These are essential for properly maintaining your warehouse racking and shelving. If you need to move a shelf to accommodate a larger product, you may need to re-anchor your shelving into the wall – requiring an impact driver to perform effectively. Your powered driver can help with the efficient placement of shelves within a rack, meanwhile.
As for hand tools, your logistics personnel will need various cutting and packing tools to efficiently manage the flow of goods in and out of the workplace. Box-cutters and strapping tensioners will be needed for the removal and replacement of polypropylene strapping, while saws and hammers can assist in the breakdown of spare crates and pallets.
