“Being properly prepared is one of the biggest assets in business.”~ Keeth Smart
Two things are certain in any business – taxes and inventory problems. Let us park taxes for some other day and discuss the latter. From the availability of the right raw materials for production to shipping the right product at right time to the customers, effective inventory management forms the backbone of any supply chain. However, as supply chains become increasingly complex the issues associated with managing the inventory have also grown proportionately if not more. Below is the list of some common issues in Inventory Management:
Common Issues in Inventory Management
- Overall Inventory Levels – Lower inventory levels do not necessarily mean effective inventory management. Having the right level of inventory to handle the present and future orders should be the top priority of a business. This not only helps to serve the existing orders without any delay but also prepares businesses for any new orders without losing a sale. However, this requires seamless integration of information systems related to order management and Inventory.
- Throughput – It isthe rate at which products/services are produced in a specific period. In the ideal case, throughput should match the rate of demand for the product. Thus, throughput is dependent on the availability of raw materials which in turn depend on material handling, transportation, and effective management of warehouses.
- Inventory Turnover – It is the number of times within a period that the Inventory iscompletely sold out. A well-integrated supply chain essentially results in high inventory turnover which indicates a decrease in the waiting time for demand fulfilment. However, improper integration of supply chain activities results in the fragmented flow of goods and services which directly impacts the turnover of inventory.
- Tracking – Also referred to as inventory control, this activity deals with monitoring the movement of the inventory in a supply chain. At any given period, businesses need to know how much inventory is available, where it is available, and the condition of the inventory. The reason for this is simple – the money that is tied in the form of inventory makes or breaks the business. Improper tracking of inventory might result in damages and spoilage, delayed deliveries, and increased inventory costs.
- Manual Activity – Excessive manual intervention in activities related to inventory management across the supply chain drags down its efficiency. Selective automation of key tasks with the help of technology is vital to improve the efficiency of the supply chain.
- Improper Communication – All the parties involved in the supply chain must be able to fetch and use the information relevant to their activities without any hindrance. Having the right information systems in place can solve this issue.
- Warehouse Inefficiency – To ensure quickand accurate shipments, and to maintain sustained high levels of customer satisfaction the warehouses must be efficient. Warehouse inefficiency shoots up the product delivery times and might result in mismanagement of inventory. Space management, effective handling of inbound and outbound inventory, and simplified flows of men and material are some ways in which warehouse efficiency can be improved.
Identifying the right tools and technologies that augment human efforts is the key to handle these issues effectively. One such tool is SAP Extended Warehouse Management (EWM). The inbound and outbound processes and movement of goods within the warehouse can be effectively handled with the help of SAP EWM.
Features of SAP Extended Warehouse Management
Following are features of SAP Extended Warehouse Management that make it the go-to application for handling warehouse operations.
- Inventory Track and Trace – From receipt of goods to issue of goods batches can be tracked ensuring complete traceability. Standard EWM Batch Management solution enables tracking of batches and processes within all areas of the warehouse.
- Yard Management – Yard is an area outside a warehouse where all the carriers await action. The control over inbound and outbound deliveries can be extended beyond the warehouse with this feature of SAP EWM.
- Shipping Cockpit – It enables users to accurately plan Outbound Delivery Orders with correct transportation units, monitor warehouse progress for transportation units, and execute work.
- Labor Management – Warehouses can be more productive by planning labor times and resources effectively using SAP EWM. The actual and planned times can be compared and shared with an external Human Resources application if any.
- Party Entitled Disposal – Multiple ERP Systems can be connected to your warehouse system using SAP EWM without the need for segregating the stocks. This ensures that there is no loss of capacity in the warehouse. Party Entitled to Dispose (PETD) feature allows placing stock from multiple systems in adjacent bins. With PETD, wrong picking of stocks is eliminated, and managing third-party stocks becomes easy with full utilization of the warehouse.
- Wave Management – Multiple orders/deliveries/warehouse activities can be grouped to improve the resource utilization and overall efficiency of warehouse operations.
- Voice Picking – The pick by voice functionality in SAP Extended Warehouse Management (SAP EWM) supports voice-based picking and internal moves in the warehouse, independently of the radio frequency (RF) picking transaction.
- Cross-Docking – is a process of eliminating the storage of goods in a warehouse by using incoming stock directly for outbound processing. EWM triggered opportunistic cross-docking is a process that works entirely within a single EWM instance and does not need support from other applications or systems.
- On-premise and Cloud capabilities – SAP EWM is available both on-premise and cloud versions
How to start and not stop at the end of this article piece?
I would recommend starting simply by just taking this approach, which has negligible risk, simple and yet an amazingly effective positive step towards our goal of a proactive strategy
A) Take pen -paper or manual method (start now)
Start implementing the recommended strategy using your existing technology resources for a known and low-risk segment of customers within your supply chain Business to find out what works and what doesn’t. Indeed this causes efforts, but this will pave the way for better clarity around unknown risks.
B) Take help from technology
Work towards making it unattended, assisted by using Super-fast digital solution such that it works autonomously without losing its efficacy by engaging a solid, affordable Business and Technology solution partner.
If you are a CEO/COO/CIO/Managing Director/General Manager who is spending more time in reactive/preventive mode than future-facing, please reach out for an exploratory conversation.
Our Contact details
Pradeep Mishra (Director and Co-founder)
Ashok Mulchandani (Partner – Business Success and Strategic Transformation)
Amit Bhagat (Director – Business Strategy)
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