Managing Supply Chains Is Instrumental for Any Business
Managing stocks well allows the company to increase its turnover. An efficient and optimized inventory management policy guarantees companies reduce their costs. This involves avoiding two pitfalls: storing too much or too little because these two excesses negatively affect the operating result. To maintain a well-oiled business, you must know what stock you have and what needs to be replaced. It could cost you time and money if you are not fully organized.
Optimize inventory to avoid overstocking
It is undeniable; overstocking is expensive. A poorly controlled volume generates fixed (buildings, heavy machinery, shelves) and variable (salaries, maintenance costs) storage costs which weigh heavily on operating accounts. In addition, overstocking unnecessarily ties up capital. The working capital requirement comprises two elements:
- Inventory.
- Cash.
Reducing your stock automatically increases your cash flow or even lowers working capital.
Avoid stock outages
Another pitfall of a non-optimized stock policy, that of stock can lead an SME into the wall. In addition to losing sales, a stockout harms the service rate and can turn loyal buyers away from the business, who go to the competition. In addition, a stock shortage can disrupt a production system integrated into a supply chain. For example, if you have run out of DOT Conspicuity Tape, you may want to place this as a high priority. An optimized stock policy must therefore succeed in avoiding overstocking without running out of stock. Each inventory and replenishment management model has its advantages and disadvantages. Either way, their application can save businesses money.
Calculate the key indicators to optimize your stocks
A management optimized stock begins with flawless visibility reserves. For this, it is important to know a few key indicators: turnover rate, flow time, and more.
Optimize stocks by reducing dormant stocks
Avoid storing dormant stocks at a loss. To solve the problem, it is up to the company to identify the no longer running stocks to reduce storage costs.
Optimize stocks by identifying supply chain hazards
Optimizing your stocks is good; securing your supply chain is better. However, the supply chain is subject to many hazards (internal, due to suppliers, financial), which must be considered when rationalizing the storage system.
How to rationalize your inventory policy
An optimal stock policy also requires streamlined processes. Transmission of information, the flexibility of supply, reduction of references and stores, and the choice of management software. Several avenues for improvement are possible for companies wishing to reinvent their storage policy.
Once you have a system that works, you will never waste time or money again and will always be on top of your stock. And, It is important to have what you need when you need it. Make a list of priorities and track your stock with the software that works best for your needs; this will make life much easier when it comes to replenishing stock and general processes.
