Tracey Baker 3 July 2019 3 min read What's in this article? Common inventory management challenges - blog series Inventory management challenge 1: Supply chain complexity How to improve inventory management Managing inventory effectively right across your supply chain Common inventory management challenges – blog series We all know that marketplaces are constantly changing. For starters, the international trading landscape is more uncertain than ever (the less said about Brexit the better!). In addition, e-commerce is driving increased competition from traders across the globe, both large and small. And with customers being more demanding and more vocal about their experiences, the need to provide an exceptional service at top speed is becoming the norm. Small and medium-sized businesses (SMEs) must respond to external market pressures and are therefore up against a multitude of inventory management challenges. These challenges include the need to: Adapt their supply chains (often making them more complex) Expand their product portfolios to offer more choice and grow their business (often putting pressure on warehouse space and processes) Ensure stock availability (at the risk of investing too much working capital) In this three-part blog series, we’ll address each of these challenges in turn. This post will look at inventory management challenges in the supply chain. Inventory management challenge 1: Supply chain complexity The complexity of the supply chain network has increased with globalisation. Many businesses rely on a vast network of manufacturers, suppliers, distributors, intermediaries and retailers to source, distribute and sell their products. This leads to a number of stock management challenges: Longer / less reliable lead times from global suppliers Increased difficulty tracking inventory along the supply chain Issues tracking and optimising stock across multiple warehouses Many companies are turning to inventory optimisation tactics to overcome these challenges. Here’s four ways to help overcome supply chain complexity: How to improve inventory management 1. Take lead times into account when placing orders In order to prevent stockouts, purchasers need to understand their suppliers’ lead times and factor these into their reordering schedules. It’s a good idea to have a supplier calendar and keep it up to date with national holidays and highlight peak periods when lead times may be longer. Inventory optimisation software, such as EazyStock, will automatically take supplier calendars into account when creating order proposals, so you don’t have to worry about running out of stock due to protracted lead times or time constraints. 2. Utilise safety stock You can utilise safety stock to buffer any supply disruptions. Make sure you use a safety stock calculation that considers lead time variations, so you have enough stock to cover any late deliveries. 3. Improve item visibility with automated inventory control systems If you haven’t already done so, you need to consider investing in automated inventory control systems. They will remove manual processes and improve the efficiency of your inventory management practices. Don’t get left behind – an enterprise resource planning (ERP) or warehouse management system (WMS) provides visibility of your inventory at each stage of your supply chain. Linked with barcode technology you can also access real-time data about each SKU in your warehouse. With accurate inventory levels it becomes much easier to make informed operational decisions about what you need to stock and when you need to order it. 4. Consolidate multi-warehouse stock Companies with multiple warehouses can also benefit from investing in inventory optimisation software that supports multi-location stock management. This will automatically suggest redistributing excess inventory from one warehouse, where demand for a product maybe low, to another, where it’s much higher. This ensures you use-up stock you already own prior to placing new orders. In addition, you’ll find you can utilise valuable warehouse space much more efficiently. Managing inventory effectively right across your supply chain SMBs can easily unravel complex inventory management challenges by breaking them down into smaller issues and going back to basics. To do this they need to address demand and supply variables that are at the heart of every supply chain. But most ERP systems lack the dynamic capabilities to support. Instead inventory management teams often resort to spreadsheets that are time and labour-intensive. If this situation sounds familiar, contact EazyStock to find out more about inventory optimisation software. EazyStock is a cloud-based, ERP add-on that helps you overcome the challenges of traditional inventory management and move towards effective, automated inventory optimisation. Read about other inventory management challenges in this blog series: Challenge no. 2: Managing growing businesses and product portfolios Challenge no. 3: Ensuring stock availability Share Tracey Baker 3 July 2019 3 min read Sign up for the EazyStock Newsletter Stay on Top of the Latest News, Trends, Tips, and Best Practices for Supply Chain Management, Inventory Optimisation, Replenishment & Purchasing, and Demand Forecasting with Our EazyStock Newsletter.