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Taking Inventory Management Beyond Small Business 

   
2018-03-02 
Kurt Barneson 
   
When many businesses with inventory of any kind first set up shop, they usually just throw boxes of inventory into a back room under an out-of-sight, out-of-mind¯ philosophy. But as any businessperson who has worked for a medium to large-sized company knows, this method backfires when people start to forget where they put items and can no longer find what they are looking for when they need it. So, below are 5 suggestions for improving inventory management in your enterprise.

1. Warehouse Organization

The first suggestion relates to the actual space in which your goods are stored. It is important that a system is developed in which goods flow through your business in an organized, easily traceable manner. Units should also be assigned specific identifying numbers as well, for even more accurate, timely tracking.

2. Item Organization

Beyond organizing a system in which goods move around in a way that makes sense, it is also crucial that the identifying numbers given to goods in your inventory actually identify the item in some way. For instance, many companies number items with a xx-xxx-xxx¯ system. The first two x's are the first two letters of the product name. The second set of x's may identify a size or location of the product in your warehouse and the final set of x's could easily be used to identify the products color or shape. The point is that using a numbering system is only useful if the numbers actually say something about the product they are numbering.

3. Get Rid of the Paper

The most ineffective way of keeping track of your inventory is to continue utilizing a paper tracking system. Moving to computers will not only improve efficiency and speed in the way you manage your inventory, but it will also ensure that information necessary for getting the right goods to the right people is always at your fingertips.

4. Evaluate

Many people try to reorganize inventory systems, but those who are the most successful in their reorganizations are those who are willing to evaluate their successes and failures and take actions accordingly. Those managers who take the time to talk with their employees to determine which inventory tools are working and which need to be fixed are those managers that create the most effective inventory management systems.

5. Valuing Inventory

There are a variety of different methods for valuing the inventory in your warehouse including FIFO, LIFO, Average, Standard and Lot. Each has its own unique set of advantages and disadvantages, but if you are not already using the FIFO method, you may want to consider it. 99% of the time, it will be the most accurate of all the methods. The point is that you want to find the valuation technique that works the best for your company.

What is the purpose of all of this retooling, you may ask? The reasons abound. It is easier to track costs and tie them into the goods they are associated with in the manufacturing process, You can better follow the work-in-process and most importantly, you are better to identify where a customer's order is at any given time. Whatever your reasons for wanting to improve your inventory management, these suggestions should help you as you strive to make your system more efficient and effective. 

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