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Five Ways to Improve Inventory Management 

   
2018-03-02 
Eugene Vasilyev 
   
Inventory management is defined as the overseeing and controlling of the ordering, storage and use of components that a company will use in the production of the items it will sell as well as the overseeing and controlling of quantities of finished products for sale

The following are five ways that a company can improve its inventory management.

1. Number your inventory efficiently. 

The item number needs to define the product, so that anyone would be able to identify the product just by looking at the item number. This will significantly decrease confusion and will increase efficiency.

2. Take advantage of the barcode system. 

Incorporate the system from when raw materials are received and until the finished goods are shipped out. This will help tack inventory better and help the inventory amounts and valuations to be more accurate. This will also decrease the handling time of items because there will no longer be any need for recording anything on paper.

3. Efficiently organize your warehouse. 

Inefficient use of warehouse space may translate into higher costs and more space that you may not need. When organizing the use of the warehouse, consider the flow of products through the warehouse in the fasted and most productive way. Also use a systematic approach to store the items in their designated spaces and be consistent in following the system.

4. Devise a vendor compliance program. 

A vendor compliance program defines the detailed expectations and specifications that you require of your vendors. This will help your vendors know what you want and help them better prepare their products for you. This will also benefit you by receiving products or raw materials that you will easily move on to the next step in your business process.

5. Measure and report the company's business activity. 

It is crucial for any company to measure its activity and compare the results to the goals that it wishes to achieve. The results should also be reported to the employees of all ranks to help them see how the company is ranking to its goals and the areas of improvement that the employees need to address.

Often times a company's largest asset is its inventory and it is tied up in that investment until the company sells the product. The company incurs cost for storing, tracking, and insuring its inventory. An inefficient inventory management system may create significant financial problems to its business, which is why it is important to constantly improve a company's inventory management system. 

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