How to Use Target Inventory to Improve Working Capital Management?
If you improvise the way you manage the supply chain then you can make a noticeable change in your working capital.
What can be more prior than expanding work capital? After all, we all want to improve the bottom line in this business and not to just make our lives easier.
If you want to improvise your working capital, then you must rely on modifying your target inventory investment to achieve maximum efficiency.
Avoid these four inventory risks
- Demising stock levels unnecessarily to get end-of-period targets
Companies that will invest in our software will often hear about “inventory optimization” and not about “Inventory reduction”. Although reduction is a good thing to do but you don’t have to be obsessed with reduction. You don’t have to reduce your custom service in the process.
- Having no information about how long their present inventory will last
You may have two things each of worth 10000$ of completed products inventory. In view of their business speed, that 10000$ may be sufficient for a 10-day supply for one thing and 10 months supply for the other.
If administrators at a managing company cannot decide how many days their stock will work then they can not manage it well. Hence, lack of this information is harmful for the company. It creates more problems across the supply chain.
- Lack of automation
Human beings are bound to make mistakes and so don’t think that your inventory manager is infallible. Human mistakes are easy to avoid using automation. Lots of smart software are available that automatically generate the results for your inventory to effectively manage it. A human who uses spreadsheet vs a script doing it, what according to you is faster? By automation you can track orders in the real time.
- Incorrect organization
There are many ways to organize an inventory. You must know how to choose the best one which is the most efficient. If you want to know whether your inventory is organized or not, notice your staff. In case the staff is having a hard time looking for things then its time to reorganize your inventory. A warehouse makes it a lot easier to manage the inventory.
- Accountability pitfalls
Make sure everyone knows what their duty is. If they don’t know who does what then there will be no accountability. In that way some tasks will be duplicated while others wont be even started.
- Lack of training
While trying to manage the inventory, the most common pitfall is lack of training. No matter if you have the latest inventor management system installed but due to lack of training you can’t use it properly. Therefore proper training is necessary to understand how to use the software correctly.
There is both right and wrong way of training your workforce, but the incapability of doing so will be a huge loss.
Teach your employees about the new system and ask them feedback about the same. If they still don’t understand how to use it then revert back to the old way.
To keep your warehouse simple and to let it run smoothly, inventory management is a must to do.