Inventory Management or Supply Chain Management has evolved a lot throughout the years, thanks to the advent of advanced technologies like Automation, Data Analytics, IIOT, and Artificial Intelligence. The sudden pandemic of Covid-19 struck the businesses heavily due to unforeseen complex issues like mandatory digitalization, work from home, inventory and warehouse management failure, etc.
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HOW DID COVID-19 IMPACT INVENTORY MANAGEMENT FOR BUSINESSES?
Improvement in inventory management systems and fluctuating customer demands are reshaping and influencing the supply chain. The lockdown has made customers rely primarily on digital means and have instigated specificity in their requirements. 86% of small businesses have adopted new techniques and developed new products due to the coronavirus. (Source: Small business economy survey). The need for the hour is for the companies to adhere to the latest market requirements.
However, the point to bear in mind is that the transition would be far from being smooth. Adapting to the new technologies, investing in tech-forward and data-driven software, and the exponential rise to competition are just a few factors forming hurdles to business growth.
Let us see how we can gain the upper hand through efficient Inventory Management Techniques.
CHANGES IN INVENTORY MANAGEMENT DUE TO THE PANDEMIC
The Rise of Automation
The need to achieve the same targets with fewer employees has brought about the inherent need for automation, and post-pandemic conditions have necessitated the same.
The perks of increased accuracy with less labor have made automation necessary for any kind of business to cope with the ever-increasing competition, ignoring the hefty price tag associated with it. Read more about automation here: How to Select the Best Accounting Software?
The lockdown has forced consumers to rely handsomely on e-commerce sites, giving them a fantastic push due to the enormous returns in online purchases. Returns seem to be posing many difficulties for small businesses, especially ones who had not set up online inventories, such as brick and mortar retailers all across India.
Well-informed businesses are working smart to reshape technologies for their short and long-term goals. Automation technologies like Imprezz automation software are the perfect tool for market return and foot traffic analysis for long-term planning.
The conflicting customer demands have brought about new and complex discrepancies such as higher returns. This leads to overstocking and capacity shortage in warehouses. The influx of inventory has made warehouse managers work tirelessly to solve the capacity issues and maintain the supply chain’s flow in order to preserve reorder points.
28% were struck with shortages and had to find alternate sourcing options (source: RetailNext). This shows that the need for the hour is a perfect Warehouse management system. This involves integrating automation software with proper deployment of correct Inventory Management Techniques.
INNOVATIVE CHANGES TO GAIN AN EDGE
1. DIVERSIFICATION OF SUPPLIERS
“Flexibility and resilience” have become the two key features in supply chain selection post-Covid-19. The businesses which can quickly look for alternative suppliers, distributors, and shipment facilitators are the ones who can gain an edge over their competitors.
- Issue: Reliance on a single supplier causes heavy losses, which most businesses faced solely dependent on Chinese suppliers. Geographically consolidation of suppliers is a constant worry for companies because if they come to an abrupt halt, no other alternative had been pre-decided.
- Solution: Detailed Supply chain mapping is a must for such a scenario. It requires heavy investment but can give high security during emergencies and curtail the constant source of worry. Automation software like Imprezz is a great way to plan and analyze alternate sources, get their data, and reduce absolute reliance on a selected few.
2. IMPROVED CLARITY AND VISIBILITY
- Issue: Post pandemic, more flexibility shall be expected in the supply chain. Corporations will tend to perform more visibility and stress tests to check for resilience and flexibility in inventory management. So businesses must plan ahead for the unexpected, understand the weak links and work on the potential vulnerabilities.
- Solution: Work more on innovative ideas and identify new options through inventory management software like that of Imprezz. Making payments payable in installments post covid is a great way to generate more traction and appeal, possibly through the inventory accounting automation software of Imprezz.
Read more about accounting automation: How to Leverage Accounting Automation? – Small Business Guide
3. ADOPTION OF AI AND IIOT
- Issue: The sheer suddenness of the global pandemic brought about brand-new challenges not seen before, and these challenges were unforeseen. This created a considerable loss of working capital and precious time in identifying and efficiently tackling them.
Efficient tracking and managing inventory is the most crucial part of a business, often not paid much attention. Inventory control is the throbbing heart of a company, which takes up most of the working capital, and causes drastic loss if not managed properly. 25% more retailers and manufacturers are investing in better technology for warehouse management (Source: Skunexus statistics). This shows the necessity of new and improved technology.
- Solution: AI and IIoT are the latest inventory management software where real-time tracking and a centralized database are created. Deployment of such services is quite complex, but thanks to Inventory Management Software like Imprezz, it has become a breeze to use advanced technologies for our benefit.
These technologies help track inventory progress in the supply chain, hence reducing the most common problems of over or under-stocking (stock levels) of finished goods. Read this article to know more about inventory management and inventory levels: Inventory Management 101: Small Business Guide
4. FOLLOW THE CORRECT INVENTORY MANAGEMENT TECHNIQUES
43% of retailers consider inventory management as their number one day-to-day challenge (source: RepricerExpress)
Here are the inventory management techniques which will help in having complete control over your inventory:
- Just-in-time (JIT) inventory: Involves storing and maintaining as little inventory as possible in the warehouse, minimizing dead stock. This reduces the holding cost and maintenance and avoiding the unnecessary hassles of warehouse management.
- ABC inventory management: This technique involves categorizing inventory in terms of priority and sorting them into categories A, B, and C. A being the most significant asset bringing the most profit, and C being the least priority.
- Dropshipping: Outsourcing the stock and never actually storing the raw material or inventory in their own warehouse forms the basis of dropshipping. Business outsourcing never actually has any contact with the merchandise, hence reducing lead time.
- Economic Order Quantity (EOQ): Ordering the ideal quantity is the most economical way of going through inventory management during sales orders. It involves careful analysis of the inventory cost, the storage cost, and the exact demand and supply ratio. This is possible through correctly maintaining a purchase order.
- Safety Stock Inventory: This technique involves ordering stock above the predicted demand. This is a safeguard against fluctuating customer demands or incorrect forecasting.
- LIFO and FIFO: First in, First out is selling the older inventory first, targetted at keeping the stock fresh. Last in First out targets selling the newest product first, which prevents finished products from getting spoiled.
- Six Sigma and Lean Six Sigma: Brand of teaching providing tools for decreasing excess inventory and improving strategies to increase profit through cash flow.
A STEP-BY-STEP GUIDE FROM IMPREZZ
Step1: Analyse loopholes and vulnerabilities in the supply chain process through data analytics software. This software maintains a list of inventory and the smooth progress from one step to the other.
Step2: Consolidate suppliers, distributors, and transporters to not face problems due to regional discrepancies. This issue is widely seen in businesses relying solely on Chinese manufacturers. Software like that of Imprezz analyses the economic problems on GST of different suppliers, accounting details finding the most suitable suppliers for you.
Step3: Use advanced tracking software to track your inventories in real-time, like Imprezz Inventory Management software. Using such software in an informed manner helps gain an edge over other competitors.
Step4: After signing up on Imprezz, build a detailed inventory chart using the easy-to-use friendly interface to manage the warehouse and use the ABC categorizing technique most effectively.
Step5: Use the central database of Imprezz to communicate effectively with all the business levels and maintain a smooth supply chain flow. This requires little effort from your side, and let Imprezz manage it for you.
Sign up with Imprezz to kickstart your business, gain an edge over competitors and scale up your business like never before.
OTHER INFORMATIVE BLOGS FROM IMPREZZ:
Planning to build a startup? Read: GST Rules for Start-ups in India
Worried about invoicing? Read: Which GST Compliant Software to Use for Invoicing?
Business Suffering due to Covid-19? Read: COVID-19 Small Business Guide