Common Inventory System Problems & Solution Essay Example for Free

Common strain system of rules Problems Solution EssaySymptomsPreoccupation with the depend inside the execution time frame. Typic eachy, companies begin altering their predict effment processes when addressing supply chain performance. But this is unwise without understanding the nature of your demand and the root causes of presage actus reuss. When forecast verity is overemphasized, fill rates and breed turns dont improve, even when forecast accuracy does. No measure of customer service or parentage turns. Customers must be satisfied on an ongoing basis for a company to achieve long-term sustainability. Yet, bloodline managers often have no idea how well customers needfully argon being met. Similarly, without knowing how quickly inscription moves through the value-creation-and-delivery system, a company wont be able to manage size up levels. Daily planning is establish on a back order report. This is an entirely reactive model. Todays fast-paced securities indust ry requires proactive inventorying planning to meet current demand. Customers will switch to a competitor if their needs are consistently unmet in the time frame they dictate.SolutionsMandatory tracking of fill rate and inventory turns for altogether product lines. Product managers should know these measures at on the whole times. Fill rate should be thrifty daily, while inventory-turn measures will vary based on sales and production cycles. The important thing is that managers are both tracking and working to improve these rates. Develop realistic forecast-error measures. Developing realistic measures for how much forecast error you can tolerate without a SKU stock-out is essential. Typically, companies estimate plus or minus 10 for this measure, which equals more or less two days worth of inventory-a miniscule occur considering that companies often have weeks or months worth of inventory. stiff forecast management and inventory planning require accurate data, so accurate fo recast error measures are a must.Mistake No. 2 Having unqualified employees manage inventory SymptomsA sight that our business is different because (fill in the blank). Every company has inventory planning challenges, such as shifting demand. No business is so different that it would not benefit from strategicinventory management. Decentralized inventory management. If store managers, office clerks, and other employees without specific inventory-management bringing up are reservation inventory-management decisions, then it is certain that inefficient inventory is piling up throughout the system.Usually, this model reflects a company with no clear goals or strategy for inventory planning. Lack of formal training program or professional peer interaction. Inventory management is a professional skill that requires upfront and ongoing education. Emphasizing buy over planning. Buyers venture purchases, exclusively planners make strategic decisions to meet goals. Thinking of inven tory planning from a purely buying point of view means opportunities for improvement and financial benefits will be overlookeddaily. SolutionsRecognize that inventory management requires professional job skills, and hire and train accordingly. Just as a company with hundreds of thousands of forgo dollars on its balance sheet would hire professional investment advisers, a company with hundreds of thousands of dollars in inventory should have professional inventory managers. Assign accountability for inventory management. Often, companies cant answer the question, Who is in charge of making sure inventory levels support strategic goals? If no one is, then these inventory planning goals will never be met.TOP 5 SOLUTIONS1. Use reorder points on inventory items to keep purchasing streamlined and inventory manageable. Reorder points (otherwise kn knowledge as min. and max. levels) are the best rule for making sure you have the right amount of inventory in your warehouse at all times. If you have alike little inventory you could lose out on sales, that if you have too much your cash is tied up in inventory that will not be sold. champion of the biggest problems many companies have is managing their cash. A quick way to solve that from an inventory standpoint is by making sure you have set the appropriate reorder points for your business. 2. Spend money on specialized training for mission-critical software. Companies with a lot of inventory spend thousands of dollars on software they need in order to manage and track their items asthey move all over the world. This software manages millions of dollars worth of assets. After spending so much money on software, some companies dont want to spend a some thousand dollars extra to buy the specialized training they need to implement the software.This is a big misapprehension because this software wont do you any good if you dont spend a little bit more to learn how to use it. If you try to learn your software on your own you may suffer for months before you learn the basics of how it works. 3. Rearrange the warehouse to set up for choice efficiencies. Sometimes trainers see mistakes that are so obvious you would think theyd be corrected immediately, but warehouse managers may be too distracted to notice them. We often see 100,000-square-foot warehouses that are organise inefficiently. These companies could save themselves large sums of money by making a few changes to where they place their inventory. The items that you sell the some or transmit out the most should be right next to the shipping dock. This keeps your employees from having to walk all the way across the warehouse to pick them up every time you are going to send them out. As companies grow, sometimes they just randomly put things where there is space.This works for a little while, but as you grow you need to think to the highest degree efficiency because the minutes that your employees spend driving just about the forklift c ost you money. 4. Take time to get to know your technology so that you can use all the functionality. Rarely will a company use all of the functionality their software provides. Most of the time there is more that the software can do for you that you havent explored. Software companies always hear from their customers about which features they want added to the software when a lot of the time the features are already there. The more features that you use in the software the more effective you can be in managing your inventory. You should either assign someone within the company to learn the software functionality or pay someone to come in and teach it to you.5. cop doing yearly physical inventories and move to a more regular, smaller cycle counting and reconciling routine. Businesses apply to shut down for a day to a week each year to go into their warehouse and physically count everything to make sure that it matched the information in their software. This practice is mostly outd ated because of the amount of time and money it takes. Doing these checks in smaller, more regular cycles keeps a company from having to shut down. We recommend pick one section each day to checkyour product levels against the information from your inventory software.