Five Common Inventory Management Mistakes from Demand Solutions
Demand Solutions recently released a white paper on managing inventory for optimal advantage (registration required) that overviewed 10 common inventory mistakes and how to correct them. Of these, the following five can cost an organization dearly if not corrected.
- Forecast Management without a Process
All stakeholders have to agree on the process and the forecast that results and someone needs to own the process to insure it's implemented properly. Otherwise the budget will be padded and the end result will be obsolete inventory and associated losses.
- Not Talking to Customers
Good inventory management is more than just the right volume, it's the right volume at the right time in the right place. Be sure to understand what is driving customer replenishment patterns to insure that production is synched to customer needs. Otherwise, inventory can build up for months at a time, which will incur additional storage costs.
- Forcing the Budget
Don't overlay the budget on top of the sales forecast. Both are approximations and both need to change to reflect reality. Attempting to synch them will result in production patterns that don't match actual demands.
- Too Many SKUs in Too Many Places
This greatly decreases warehouse efficiency and increases fulfillment costs.
- Never Trying New Things
New technology provides better capability for ongoing, collaborative improvement. Avoiding new technology will limit operational efficiency and cost savings opportunities.