4 Don’ts of Inventory Management

Don’t start your project without a strategy; it’s a surefire money pit.

Don’t Drive Around in Circles

A Kind Warning to Readers
Don’t start your project without a strategy; it’s a surefire money pit. Off-the-cuff inventory management will cost you in unexpected labor and rework efforts. After hitting a few stumbling blocks, one of our clients began using internal resources to manage inventory and paying a vendor to do the exact same job. A crazy situation, but not uncommon. We’ve also had multiple clients come to us after already wasting money and time on poor data management. In some cases, the cost of maintenance had superseded the value that the data brought in. It is sad news when you end up working for your data rather than having your data work for you. Like a scary scene from 2001: A Space Odyssey – it ain’t pretty, and it’s bad for business.
Inventory management strategy must align with overall business strategy. So, take a step back and think big: what does successful inventory management look like? How do you define it? Is your main goal to maintain key equipment and minimize unnecessary inventory? Or, is it to have a reliable system with easily identifiable and retrievable data? Whatever your goal is, first think of that big picture. Next, break it up into short-term goals. Attainable milestones will help you measure performance and give you the clear visibility needed to drive great inventory management.

Don’t Sweep It Under the Rug

It might be simple; it might be complex. Still, everyone uses some type of system to manage inventory.
From spreadsheets to web-based management tools, pros rely on the data in these systems for financial reports, tax payments, and inventory health. Many users focus heavily on the physical management of inventory. It’s key to maintaining operations, of course. However, it does not make physical tracking more important than keeping an updated system. If system managers fail to maintain an accurate and up-to-date inventory system, business users will stop relying on it for their inventory management. They’d end up with a pile of individual excel files spread out over the company. Pretty cringe-worthy. The situation leads to a major lack of overall visibility of real, managed value and metrics. Think about putting controls in place to make sure people are transacting within one consistent system. We’ve found that having system-generated notifications or approvals for certain transactions (i.e. physical movements of inventory require an approval from a material coordinator) can result in major maintenance support. That said, it is necessary to think about what ideas would make sense for your company.

Don’t Forget

Remember that time at the end of the year…you know, a few years back when you and all your co-workers were under pressure? When you were trying to reconcile inventory and finances? You know how you wished you had a cleaner and standardized inventory system that would make the entire activity easier? Maybe you could have actually enjoyed spending time with family and friends during the holidays or, Heaven forbid, even got a little bit of sleep.
Don’t forget that feeling. That is what happens when you fail to maintain a clean and updated inventory system. It gets in the way of the good stuff. When your inventory management is smooth, you can let work be work. That way, you can live your life, which is what it’s really all about anyways.

Don’t Let Me Down

Many of the common issues with inventory management come from people. Now, it’s pretty rare that people screw things up on purpose. The most common reason is bad communication. It’s a little thing, but it wreaks such havoc it can be as deadly and common as the flu.
We strongly recommend doing an in-depth analysis of current systems of hierarchy and methods of communication within your team. Ask yourself: does your team have clear visibility of roles and responsibilities? Do they know what you expect from them on a daily, weekly, or monthly basis? Do they have the right tools, knowledge, and training to do what they need to do? If you notice gaps or weak spots in your answers, take immediate action. Your employees and your bottom line will thank you.

Javier Ramirez
November 29, 2016