5.
5 INVENTORY
MANAGEMENT
a. Assessing requirements;
b. Receiving of stock;
c. Releasing of stocks:
d. Recording;
e. Maintenance
INVENTORY MANAGEMENT
Inventory management is the process of ordering,
handling, storing, and using a company’s non-
capitalized assets. For some businesses, this involves
raw materials and components, while others may
only deal with finished stock items ready for sale.
Either way, inventory management all comes down
to balance - having the right amount of stock, in the
right place, at the right time. And this guide will help
you achieve just that.
A. ASSESSING REQUIREMENTS
Analyze Sales Data:
Historical Trends- Examine sales records over different
periods to identify patterns.
Seasonal Variations- Note fluctuations during holidays or
special events that influence demand.
Determine Safety Stock Levels:
Service Level Goals- Decide the required service level (e.g.,
95% of customer orders filled).
Variability in Demand- Calculate safety stock based on
demand variability and lead time variability.
Consider Lead Times:
Supplier Reliability- Analyze how
consistently suppliers meet delivery
times.
Order Cycle- Understand the time it
takes from placing an order to receiving
inventory.
B. RECEIVING OF STOCK
Prepare Receiving Area:
Space Organization- Ensure adequate space for incoming
goods and necessary equipment (e.g., scales, barcode
scanners).
Staff Training- Train staff on receiving processes and
safety protocols.
Inspect Delivery:
Quality Control- Check for damage, defects, and
compliance with order specifications.
Quantity Verification- Count items against the packing list
and purchase order.
Document Receipt:
Delivery Note- Verify and sign the delivery note
provided by the supplier.
Internal Records- Create an internal document
for tracking received items, noting any
discrepancies.
Update Inventory Records:
Inventory Management System- Input data into
the system to reflect current stock levels.
Real-time Tracking- Ensure records are updated
instantly to prevent discrepancies.
C. RELEASING OF STOCKS
Process Orders:
Order Management System- Use software to track
customer orders and prioritize fulfillment.
Batch Processing- Group similar orders to improve
efficiency in picking.
Pick Inventory:
Picking Lists- Generate lists for warehouse staff to locate
and retrieve items.
Picking Methods- Implement methods like zone picking
or wave picking to optimize the process.
Pack Products:
Packaging Standards- Use appropriate materials to
protect items during shipping.
Labeling- Clearly label packages with shipping
addresses and tracking information.
Ship Orders:
Carrier Selection- Choose reliable shipping carriers
based on cost and service level.
Shipping Confirmation- Notify customers with
tracking information once orders are shipped.
D. RECORDING
Log Transactions:
Daily Logs- Maintain daily records of all inventory
transactions for accountability.
Automated Entries- Use software to automatically log
transactions to reduce manual errors.
Use Inventory Management Software:
Features- Look for software that supports barcoding,
real-time tracking, and reporting.
Integration- Ensure the system integrates with other
business systems (e.g., accounting, sales).
Conduct Regular Audits:
Cycle Counts- Perform periodic counts of specific
inventory items to maintain accuracy.
Full Inventory Counts- Conduct comprehensive counts at
set intervals (e.g., annually).
Adjust for Discrepancies:
Investigate Variances: Analyze any discrepancies
between physical counts and recorded amounts.
Correct Records: Update inventory records based on the
findings of the investigation.
E. MAINTENANCE
Monitor Stock Levels:
Dashboards- Use visual tools to track stock levels and alert for
restocking needs.
Reorder Points- Set automatic reorder points to trigger restocking
before items run low.
Conduct Physical Counts:
Scheduled Counts- Plan regular counts to ensure ongoing
accuracy and reliability.
Staff Involvement- Engage staff from various departments to
ensure comprehensive counting.
Implement Inventory Control Systems:
Management Techniques- Utilize techniques like
JIT (Just-In-Time) to reduce excess inventory.
FIFO/LIFO- Decide on a method that best suits
the product type and business model.
Review Aging Inventory:
Identify Slow Movers- Analyze inventory
turnover rates to identify items that are not
selling.
Promotional Strategies- Develop strategies to
move slow inventory, such as discounts or
THANK YOU!!!
