Watch our episode on retail inventory management below to learn the ins and outs of how to manage your inventory like a pro. For a quick overview of what we covered in the episode, read on.

What is retail inventory management?

Let’s start with the basics. When we talk about retail inventory management, we’re dealing with two main types of inventory that are equally important to your success: finished goods and packing materials.

• Finished goods: The products sitting on your shelves, ready for customers to purchase.
• Packing materials: The materials used to get your finished products to your customers.

It may not seem like a big deal to track packing materials, but try thinking about it this way: if you’re selling a $5,000 camera and you run out of the special bubble wrap needed to ship it safely, that customer isn’t going to get their camera.

This is why successful retailers never sleep on packing materials. Your boxes, tissue paper, and protective packaging are just as critical as the products themselves.

The five categories of finished products

You can break down finished goods into five distinct categories, and understanding these categories can transform how you manage your business.

• Ready-for-sale inventory is obvious. It’s what customers can buy right now.
• Allocated products refer to those that have been sold and assigned to a customer. This distinction is crucial because the product might still be sitting on your shelf, even though it has already been sold.
• In-transit inventory refers to products that have left your facility but have not yet reached the customer.
• Safety stock is your business’s parachute for when things go wrong (and they will). Consider safety stock as your cushion for those “just in case” moments.
• Seasonal inventory is stock you can plan for. Whether it’s Valentine’s Day, Black Friday, or that predictable March surge you’ve noticed in your sales data, seasonal inventory helps you prepare for known demand patterns.

Why this actually matters for your bottom line

Here’s the thing about effective retail inventory management—it’s not just about organization. It’s about having exactly what you need to meet customer demand without tying up too much cash in products that sit on shelves collecting dust.

Good inventory management saves you money by reducing carrying costs and preventing dead stock.

However, the time savings from proper inventory management may provide the most value. Think about cooking in your own kitchen versus trying to make the same meal in someone else’s kitchen. In your own space, you know exactly where everything is, and you can whip up a great meal in just  20 minutes. In an unfamiliar kitchen, that same meal takes twice as long because you’re constantly searching for tools and ingredients.

Inventory management works the same way. When everything is organized and you know exactly what you have and where it is, your entire operation runs smoothly. And when your processes are smooth and efficient, you can scale and grow your business.

When retail giants fall: inventory management disasters

Even giant retailers aren’t immune to the problems poor inventory management can bring. Take Forever 21, which built a $4.4 billion empire through fast fashion, mass-producing trendy clothes at low prices with quick turnovers. However, when the retail landscape shifted in 2017, they failed to adapt their inventory strategy. Instead of adjusting, they continued to expand and accumulate excess inventory. In fast fashion, when styles change faster than you can sell them, that excess becomes dead stock. As a result, they were forced to dramatically reduce prices, which destroyed their profit margins and eventually led to bankruptcy in 2019.

Meanwhile, the price wars of the 1990s revealed another valuable lesson in inventory management. While Walmart implemented just-in-time inventory management, Kmart continued to use outdated inventory techniques. The results were stark: over five years, Kmart’s stock dropped 60% while Walmart’s rose 80%. Kmart’s inability to modernize its inventory systems ultimately led to its merger with Sears.

The lesson? Even billion-dollar companies can’t survive poor inventory management.

Building your inventory management foundation

So what should you actually do? The most effective thing you can do is invest in a proper inventory management system. Modern systems let you handle purchase orders, sales orders, and even pick, pack, and ship, all while using barcodes to track everything in real-time.

Another easy win is keeping a healthy supply of safety stock. As we’ve seen in recent years, supply chain disruptions can happen unexpectedly. And yes, you need to start a cycle count program. Nobody likes counting inventory, but even the best systems in the world will have discrepancies between what’s in your computer and what’s actually on your shelves.

The bottom line

Successful retail isn’t about having the most products or the biggest store, it’s about having the right products at the right time in the right quantities. It’s about understanding that inventory management has a direct impact on your cash flow, customer satisfaction, and ability to grow.

Ready to dive deeper into these inventory management strategies? Watch the full podcast episode to learn more.

The post Secret Life of Inventory – Episode #2 – Mastering Retail Inventory (Why Did F21, Kmart & Sears Go Bankrupt?) appeared first on inFlow Inventory.

• Business assets are divided into two categories: current and fixed. Current assets like inventory and packaging support short-term operations, and fixed assets like equipment and warehousing infrastructure support long-term functionality.
• Tangible warehouse assets (e.g., forklifts, racks) enable efficient storage and handling, while intangible assets (ex. logistics expertise) boost performance and customer trust.
• The asset lifecycle includes procurement, usage, maintenance, depreciation, and disposal, with each stage requiring strategic planning to maximize return on investment and minimize disruptions.
• Poor asset management increases operational risks, including equipment failures, financial inaccuracies, and inventory shortages.
• Strategies such as asset categorization, regular audits, and automated replenishment rules help reduce losses and ensure smooth, cost-efficient operations.
• Effective asset management relies heavily on inventory software tools that provide real-time visibility, enable proactive maintenance, and improve forecasting accuracy.

Business assets are valuable resources owned by a company that contribute to its daily operations, financial reporting, and long-term planning. They’re essential for creating value, generating revenue, and ensuring sustainability and longevity. Inventory, equipment, and warehousing infrastructure are key asset types, classified as current and fixed assets, respectively.

Inventory represents goods available for sale, vital for meeting customer demand and maintaining cash flow. Equipment, such as machinery and vehicles, are necessary to produce and deliver goods. Warehousing infrastructure ensures secure goods storage and logistics optimization.

Proper tracking of these assets is crucial for accurate financial reporting, enabling businesses to assess their financial health through balance sheets. Moreover, efficient asset management facilitates strategic planning by identifying areas for investment and potential cost savings, thereby fostering long-term growth and stability.

Understanding company assets in inventory and warehousing

In warehousing environments, companies divide their assets into tangible and intangible categories. Tangible assets include storage racks, forklifts, and inventory. These physical assets are crucial for storing and handling goods efficiently, which directly impacts the speed and accuracy of order fulfillment. Proper use of tangible assets enhances supply chain performance by minimizing downtime and optimizing warehouse space utilization.

Intangible assets, such as company slogans and expertise, also play a crucial role. Expertise in logistics management ensures that warehousing processes are streamlined, reducing errors and maximizing throughput. A strong company slogan can enhance brand recognition and foster customer trust, indirectly boosting market presence and demand fulfillment capabilities.

Together, these assets ensure that warehousing operations are effective and contribute significantly to overall supply chain efficiency. This enables businesses to meet customer expectations swiftly and reliably while maintaining a competitive advantage.

Types of business assets

Current assets in a business — such as raw materials, finished goods, and packaging — are essential for daily operations and are expected to be converted into cash within a year. Fixed assets, including warehouse buildings and barcode scanners, are long-term resources that remain in use for extended periods, supporting the infrastructure and operational activities. Together, these assets ensure smooth distribution processes.

Manufacturing and wholesale software tools play a crucial role in asset management. They provide real-time data and analytics for employees to refer to. These tools empower businesses to efficiently organize, track, and manage assets through features like inventory monitoring, asset utilization tracking, and maintenance scheduling. 

By leveraging such software, companies enhance their ability to forecast demand, minimize waste, and ensure timely replenishment, thus optimizing operational efficiency and reducing costs. This strategic approach streamlines asset management and supports better decision-making and growth opportunities.

Asset lifecycle: From acquisition to disposal

By comprehensively managing the asset lifecycle, companies can ensure they’re purchasing cost-effective assets, maintaining them properly to extend their useful life, and disposing of them responsibly at the end of their cycle. This approach contributes to overall efficiency by maximizing return on investment while minimizing unexpected downtime and maintenance costs.

Additionally, a firm grasp of the asset lifecycle aids in strategic planning, ensuring alignment with long-term business goals and facilitating budgeting for the future. By adopting a lifecycle perspective, businesses can achieve greater sustainability and agility in their asset management practices, leading to competitive advantages in their industry.

Procurement

The procurement stage of the business asset lifecycle involves acquiring assets strategically to meet the organization’s operational needs. This phase includes identifying requirements, selecting suppliers, negotiating contracts, and purchasing the goods or services. 

Effective procurement makes it possible to secure quality assets at competitive prices, ensuring value for money. It requires thorough market research and a strong understanding of supply chain dynamics, but it helps to make costs more efficient and sets the stage for smooth integration into the company’s operations.

Usage

The usage stage of the business asset lifecycle focuses on deploying and using assets efficiently to support business operations. During this phase, assets are actively used to generate value, necessitating regular maintenance and monitoring to ensure optimal performance and longevity. This means never deviating from operational protocols, always scheduling routine inspections, and promptly addressing any needed adjustments or repairs. Effective management at this stage maximizes asset productivity while minimizing downtime and unexpected costs. 

Maintenance

The maintenance stage is essential for preserving asset functionality and extending lifespan. It involves routine inspections, preventive maintenance, repairs, and upgrades to ensure assets operate at peak efficiency. 

Regular maintenance minimizes unplanned downtime and prevents costly failures, contributing to more predictable operating expenses. With a structured maintenance schedule, businesses can optimize performance, enhance safety, and maintain compliance with industry standards. This stage also involves monitoring asset conditions and utilizing data analytics to identify potential issues, enabling proactive solutions that sustain productivity and support long-term business success.

Depreciation

Over time, business assets can become obsolete, resulting in depreciation of their value. This depreciation stage is vital for financial accounting, as it allows businesses to distribute an asset’s cost over its useful life, which in turn affects both tax calculations and financial statements. Standard depreciation methods include straight-line and declining balance, which help businesses adhere to accounting standards, maintain transparent financial reporting, and optimize their tax obligations.

Disposal

The disposal stage of the business asset lifecycle involves retiring assets that are no longer useful or cost-effective to maintain. This stage includes evaluating the asset’s condition, determining its salvage value, and deciding the most advantageous method of disposal. This could be selling, recycling, or donating. 

Assets must be disposed of properly not only to maximize residual value but also to comply with relevant environmental regulations and company policies. Proper documentation and reporting during disposal are crucial for accurate financial records. They also aid in future planning and budgeting, thereby ensuring sustainable asset management practices.

Strategies for managing business assets efficiently

Effective warehouse asset management involves several best practices to ensure operational efficiency and minimize losses. Categorization of assets helps streamline storage, retrieval, and tracking processes, making inventory more accessible and organized. Regular audits are essential for verifying physical inventory against records, identifying discrepancies, and preventing losses or theft.

By automating replenishment rules, inventory levels are maintained at an optimal level, thereby reducing the risk of stockouts and excessive inventory holding costs. Inventory management software is key here. It enhances visibility across the entire supply chain, allowing inventory movements to be tracked and analyzed in real-time.

This software reduces the likelihood of misplacement or overstocking by providing accurate data and alerts. Additionally, it enables data-driven decision-making and improves forecasting accuracy, fostering more efficient and agile warehouse operations.

How asset management reduces operational risk

Asset mismanagement in high-volume warehouse or manufacturing environments significantly elevates operational risk by leading to inefficiencies and disruptions. Poorly managed assets can lead to inventory inaccuracies, resulting in stockouts or overstocking, which can halt production lines or increase holding costs. 

Mismanaged assets also increase the likelihood of equipment failures. Irregular maintenance schedules and neglected asset conditions can lead to unexpected breakdowns, resulting in costly downtime and delaying order fulfillment. 

Additionally, inadequate asset tracking can lead to loss, theft, or misplacement of assets. Which, in turn, affects the accuracy of financial records and compliance. By implementing effective asset management strategies, such as regular audits, maintenance schedules, and real-time inventory tracking with advanced software, businesses can mitigate these risks, ensuring smooth operations, optimized inventory levels, and enhanced financial management.

The post Business Assets: Types, Examples, and Management Strategies appeared first on inFlow Inventory.

This article will briefly summarize the key concepts covered in the podcast, but we’re just scratching the surface here. For the complete breakdown, detailed explanations, real-world examples, and all the insider tips, be sure to check out the full episode linked below.

What exactly is inventory management?

At its core, inventory management is about having what you need when you need it. Now, don’t make the mistake of thinking this only applies to retail stores with shelves full of products. Inventory management extends to every industry, from wholesale & distribution, manufacturing, warehousing, field services, and even asset tracking. The reality is that any business with physical goods that need to be tracked needs to think about inventory management.

When it comes to inventory, the goal is simple: maintain the perfect balance. You want enough inventory to fulfill orders and meet demand, but not so much that you’re drowning in storage costs or dealing with dead stock that ends up gathering dust. However, while the goal may be simple, achieving it is anything but. 

Why inventory management can make or break your business

Here’s a scenario that’ll hit close to home: imagine you own a backpack company. Customers want to buy your backpacks, but you’ve run out of stock. No backpacks means no sales, which means no revenue. Game over.

On the flip side, what if you ordered too many backpacks? Now you’re paying to store them, risking theft or damage, and if a newer, better backpack hits the market, you’re stuck with inventory nobody wants.

Both these scenarios can leave a business in a very sticky situation, and many companies, both big and small, fail because of inventory-related issues like these. 

Essential inventory management techniques you need to know

The world of inventory management offers numerous strategies, and the beauty is that you can mix and match techniques based on your specific needs. Let’s explore some of the most impactful methods:

ABC analysis

ABC Analysis follows the 80/20 rule, categorizing your inventory into three buckets. Your ‘A’ items are high-ticket, expensive-to-store products with lower profit margins. ‘B’ items fall in the middle, while ‘C’ items, typically representing just 20% of your inventory, are your money-makers, accounting for roughly 80% of your profits.

FIFO

First in First Out (FIFO) is a popular costing method that ensures older inventory moves before newer stock. It’s crucial when managing perishable goods or preventing obsolescence. Toyota popularized this approach with the philosophy that anything sitting on shelves has a higher chance of being lost, stolen, or becoming obsolete.

Just-in-time inventory

Walmart popularized just-in-time inventory management back in the late 90s. It was once the gold standard, focusing on having exactly what you need when you need it. However, recent supply chain disruptions have shown the risks of this approach. I’m sure we all remember the great toilet paper shortage of 2020.

Safety stock and reorder points

Consider safety stock and reorder points as your company’s insurance policy. Safety stock is your “just in case” inventory for unexpected demand spikes or supply issues, while reorder points trigger when it’s time to order more. Modern inventory management systems can automate these notifications, eliminating the headache of manual tracking.

The technology advantage: perpetual vs. periodic systems

Gone are the days of managing inventory with pen and paper (though believe it or not some businesses still do). Perpetual inventory systems provide real-time visibility into your stock levels, automatically updating as items come and go. This beats the old periodic approach, where you only knew your inventory levels when you physically counted everything.

What makes these systems even more powerful is the ability to track inventory across multiple locations, providing a clear view of which warehouse has which products at any given time. This level of visibility transforms how you fulfill orders and manage your supply chain.

Your next steps in inventory management

Understanding these fundamentals is just the beginning. Each technique we’ve covered has specific applications, formulas, and best practices that can dramatically impact your bottom line. The key is identifying which methods align with your industry, business model, and growth stage.

Want to dive deeper into these inventory management techniques? Check out our full episode where we break down the formulas, share real-world examples, and explore how different industries apply these strategies.

The post Secret Life of Inventory – Episode #1 – What is Inventory Management? (Learn the Basics & Techniques) appeared first on inFlow Inventory.

• Supply chain automation uses technology to replace manual processes like inventory tracking, order fulfillment, and procurement coordination.
• Common automation tools include inventory management software, barcode scanning, and automated picking/packing systems.
• Automation benefits include fewer errors, real-time production visibility, smoother workflows, and the ability to scale without sacrificing service quality.
• Implementation challenges like budget constraints, integration issues, staff resistance, and poor rollout planning can derail automation efforts if not addressed early.
• Emerging trends such as AI-driven forecasting and IoT sensors are shaping the future of automation, enabling predictive decision-making and proactive supply chain management.

If you manage logistics, distribution, or procurement, you’ve probably faced the challenge of keeping operations flowing smoothly. That’s where supply chain automation steps in. It’s the use of technology to simplify and streamline tasks that were once handled manually, from tracking inventory to coordinating deliveries.

Instead of relying on spreadsheets or endless emails, supply chain automation replaces repetitive labor with intelligent systems. These tools speed things up and reduce costly errors that slow your business down. Automation is now transforming every phase of the supply process, from procurement to fulfillment, so your team can operate with better speed and clarity.

This article explores how supply chain automation works, what tools make it possible, and how to start implementing it in a way that drives real results.

Key components of supply automation

Getting started with automation doesn’t mean jumping straight into robots or artificial intelligence (AI). At its core, supply automation begins with practical tools you can put to work right away.

For many businesses, the first step is adopting inventory management software that centralizes stock levels, order statuses, and supplier details in one dashboard. A good system helps you know what you have, where it’s stored, and when it’s time to reorder — all without digging through piles of paperwork.

Barcoding systems and automated picking solutions also play key roles. These tools help warehouse staff locate, scan, and ship items faster with fewer mistakes. Automated fulfillment systems go further by connecting your online orders directly to your warehouse, so everything from packaging to shipping can run without manual input.

Benefits of automation in supply chain operations

Every efficiency gain matters when you’re constantly managing moving parts, inventory, orders, suppliers, and shipping. Below are some of the most impactful ways automation can improve your work across warehousing, procurement, and fulfillment.

Improved accuracy and speed

Human error is one of the biggest challenges in supply chain management. Whether it’s incorrect stock counts or shipping delays, these mistakes can damage customer relationships and increase costs. Automation minimizes those risks. With digital systems handling repetitive tasks, you get faster execution and fewer mistakes.

Real-time production tracking

Manufacturers benefit from automation tools that keep their production lines on schedule. Manufacturing software platforms allow you to track raw materials and production timelines in real time, reducing guesswork and giving your team a clearer view of operations from start to finish.

Fewer bottlenecks

You can shorten the time between purchase and delivery by automating fulfillment steps, from receiving an order to shipping it out. This gives customers a smoother experience and frees your team to focus on higher-level strategy instead of getting bogged down in routine logistics.

Automated inventory management brings more than just convenience; it builds a foundation of consistency. When your operations run smoothly and predictably, you have more room to scale, take on new clients, and respond quickly to demand shifts without sacrificing accuracy or service.

Common challenges in supply automation

Though the payoff of supply chain automation can be significant, getting there isn’t always simple. Automation introduces new systems, changes to workflows, and sometimes unexpected growing pains. To avoid frustration and failed investments, it helps to know what hurdles you might face along the way and how to prepare for them.

Budget limitations

Cost is one of the first barriers businesses encounter. Upgrading from manual processes to advanced systems can require a sizable upfront investment. You’ll need to invest in inventory management software and new hardware like barcode scanners — and spend time training your staff on how to use them.

Integration issues

Your current systems, whether for finance, shipping, or customer service, might not easily mesh with the automation tools you’re considering. Without proper integration planning, you can end up with a messy tech stack that creates silos instead of improving communication.

Change resistance and training gaps

People are creatures of habit. Even if a new tool offers clear benefits, some team members may resist change and not want to adopt it. Training is critical, but so is communicating the value of automation clearly and consistently across departments.

Poor implementation can introduce risk

A rushed or poorly planned rollout can do more harm than good. Incomplete workflows, lack of contingency plans, or overdependence on one tool can all lead to disruptions. In fact, when automation is handled without oversight, it can introduce operational risks that are harder to detect and fix.

Recognizing these challenges early gives you a chance to overcome them, if not prevent them from happening in the first place. With a clear plan and strong support from leadership, you’ll be better equipped to roll out automation that supports your team. 

How to start automating your supply chain

Starting small can make the automation journey more manageable. To get started, identify the tasks that are the most time-consuming and error-prone in your current workflow. For many businesses, that means tackling inventory tracking first.

Switching from manual stock counts to a digital system helps you get a clearer view of what’s coming in and going out. From there, look for tools that fit your specific needs. If you’re managing bulk purchases and need to keep tabs on hundreds of SKUs, wholesale software for inventory and order management can help you stay organized and responsive.

Once you’ve seen the benefits in one area, expanding automation across other touchpoints — like order fulfillment, supplier communication, or delivery tracking — becomes easier. The key is to make gradual, well-supported improvements instead of automating everything simultaneously.

Monitoring and optimizing supply chain automation

Automation isn’t a one-and-done process. You’ll need to monitor how your systems are performing and where you can improve. Dashboards, reports, and performance metrics will become your best friends here.

Track order accuracy rates, turnaround times, and stock levels regularly. These insights will help you fine-tune operations and avoid common pitfalls like overordering or missed reorder points. Integrated analytics tools also let you optimize how you work with vendors and adjust supply levels before problems crop up.

More importantly, performance tracking gives your team real-time data to work with. That level of visibility allows your team to make better decisions, solve problems more quickly, and collaborate smoothly across other departments in your organization.

Future trends in automation in supply chain management

The future of supply chain automation is already taking shape, and it’s being built with smart, connected systems. AI and machine learning are powering smarter forecasting and demand forecasting. That means you can predict supply needs based on seasonal trends, market conditions, or even weather data.

The Internet of Things (IoT) is also transforming how goods are tracked in transit. Sensors can now monitor temperature, humidity, or location in real time, helping ensure sensitive products arrive in good condition.

Businesses that embrace these technologies early are setting themselves up to build more resilient, flexible supply chains. Instead of reacting to disruptions, they can respond proactively and maintain continuity, even during a crisis. If you’re not exploring how automation can work for your business, you’re likely leaving efficiency and profit on the table.

The post What Is Supply Chain Automation? appeared first on inFlow Inventory.

• Inventory visibility refers to the ability to track inventory levels, movement, and status in real-time across all business locations.
• It reduces risks such as overstocking and stockouts, improves demand forecasting, and aligns data across different departments and locations.
• Inventory management software provides real-time insights, automates manual tasks, and integrates with other systems (like accounting or ecommerce) to streamline operations and reduce errors.
• Common challenges include human error, siloed systems, poor communication, outdated tech, and lack of standardized procedures.
• To improve visibility, businesses should centralize their inventory data, conduct regular audits, train staff, set automated reorder points, and utilize tools such as barcoding.

Inventory visibility is an organization’s ability to track and monitor its inventory in real time across all its locations, including warehouses, stores, and distribution centers. This means having an accurate, up-to-date view of inventory levels, movements, and status at any given moment. 

Inventory visibility is crucial for businesses because it facilitates better decision-making, better customer service, and boosts overall operational efficiency. With accurate inventory data, businesses can reduce overstocking and stockouts, optimize supply chain management, and respond accordingly to any changes in demand.

The importance of inventory visibility 

Inventory is a core component of a business’s assets, and how an organization handles its inventory can directly impact its financial and operational performance. By providing an up-to-date picture of stock levels and movements, inventory visibility can directly enhance forecasting, planning, and demand fulfillment. 

This allows companies to make informed decisions regarding purchasing and production, mitigating the risks of overstocking or stockouts. With precise data on current inventory, businesses have a better idea of customer demand and make adjustments if needed, which results in using resources and capital more efficiently.

Further, accurate inventory visibility supports effective communication among various departments, ensuring that marketing, sales, and supply chain operations are aligned and responsive to market dynamics. As a result, companies can easily find ideal inventory levels, allowing them to avoid unnecessary carrying costs and increase customer satisfaction by reliably meeting their demand.

Benefits of inventory visibility for growing businesses  

Inventory visibility offers numerous benefits for growing businesses by enhancing their operational efficiency and decision-making capabilities. Accurate and real-time access to inventory levels helps avoid expensive issues like overstocking and stockouts, which can hinder young companies’ growth.

Increased visibility also allows for more effective demand forecasting and resource allocation, giving new businesses a better understanding of customer expectations and industry trends. Through these insights, businesses can provide better service to new customers, resulting in lasting positive impressions that foster continued loyalty.  

For businesses without prior experience, inventory management can seem complex. Fortunately, inventory management software makes it easy to streamline the process. These systems provide real-time data and analytics, so businesses can make informed decisions about purchasing, sales strategies, and demand forecasting. 

Further, automating manual inventory management tasks helps cut down on potentially costly mistakes. Additionally, inventory software often integrates with other business systems such as accounting and ecommerce platforms, ensuring seamless operations and data consistency across the organization.

Common inventory visibility challenges 

Maintaining inventory visibility can be difficult due to several notable challenges, including: 

• Human error: Human mistakes during manual data entry—such as incorrect counts, mislabeling, and misreporting—can lead to inaccurate stock levels, misplaced items, and inefficiencies in order fulfillment. 
• Siloed systems: Multiple systems that don’t communicate (e.g., spreadsheets, disconnected software) create “silos” of information, making it hard to get a consolidated, accurate view of inventory.
• Poor communication: Similarly, if staff from different departments (like sales, warehouse, procurement, and finance) don’t share or synchronize information, it can result in mismatched forecasts, over-purchasing, or missed sales due to stockouts.
• Inadequate technology: Outdated or poorly implemented inventory software, or a lack of automation tools like barcoding or RFID, can limit an organization’s ability to track stock efficiently and scale operations. 
• Lack of standardized procedures: When different locations follow inconsistent processes for receiving, recording, and managing inventory, it creates confusion and inconsistency in inventory records, especially when transferring items between locations.

It’s essential to identify and promptly address any notable inventory issues within your organization, as poor visibility can result in serious problems like overstocking, shipping delays, and lost revenue, which can leave lasting impacts on your organization. 

How to improve inventory visibility with the right tools 

Automated tools like inventory software can significantly enhance visibility across multiple locations by providing real-time data and centralized control. These systems enable businesses to track stock levels, manage orders, and predict demand efficiently by leveraging automated processes that minimize human error. 

With integrated platforms, data from various warehouses or stores is synchronized and made easily accessible, allowing for accurate updates on stock movements and availability. This comprehensive visibility ensures that inventory is optimized to meet customer demands, reduce excess stock, and prevent stockouts, ultimately leading to more efficient operations and better decision-making. 

These platforms are designed to meet the differing inventory management needs of different organizations. For example, inFlow manufacturing software allows you to control every stage of the process with greater precision, from generating the bill of materials to estimating build times and labor costs, which can help manufacturers prevent the waste of raw materials and fulfill orders more efficiently.   

However, organizations in other sectors may need different tools to suit their needs. Wholesale inventory software, for example, is designed to monitor unit stock levels in units and track the cost of goods sold (COGS) for every transaction, making it easier to identify inefficiencies in your process. Wholesalers can also set automatic reorder points for individual products, ensuring they never have too much or too little of anything. 

Additionally, barcoding — the practice of assigning a unique machine-readable code to each asset — is an essential part of inventory management for organizations in many sectors. An efficient barcoding system can allow for quicker audits and inventory checks, enhance traceability, and reduce the risk of manual data entry errors.

Strategies to improve inventory visibility across locations 

Managing inventory across multiple locations requires a significant level of oversight and coordination. Even if you have the latest technology at your disposal, issues can still arise if you don’t implement the right strategies. Efficient methods for improving inventory visibility include:  

• Conduct regular audits: Frequent inventory audits help detect discrepancies early, maintain accuracy, and reduce the disruption of full physical inventory. This increases confidence in inventory data and supports better decision-making. 
• Centralize your data: Using a centralized, cloud-based inventory management system gives real-time visibility into stock levels at all locations. It reduces errors from manual data entry, ensures consistency, and allows informed decision-making company-wide.
• Train staff on best practices: Even the best systems can fail with poor human input. Ongoing staff training ensures employees follow procedures correctly, leading to more accurate records and fewer operational issues.
• Automate reorder alerts: Setting automated reorder points for each location ensures timely restocking. Automation reduces the risk of human oversight, maintains consistent stock levels, and avoids costly delays in fulfillment. 
• Integrate inventory with other data: Integrating inventory with data from other departments (sales, procurement, accounting) improves efficiency, reduces double entry, and helps track the actual cost and performance of inventory from purchase to sale. 
• Allow mobile access to stock data: Allowing field and warehouse staff to access stock data on mobile devices can prevent errors and make it easier to share important real-time updates as they arise, leading to increased productivity and optimized inventory levels. 

Final thoughts

Inventory should be viewed as a core business component because it directly impacts a company’s ability to meet customer demand and maintain operational efficiency. Ultimately, accurate tracking can lead to improved financial performance and streamlined workflows. Given these factors, understanding and managing inventory effectively is essential to sustaining and growing a successful business.

The post What Is Inventory Visibility? appeared first on inFlow Inventory.

• Inventory accuracy reflects how well a business manages its stock and helps prevent issues like stockouts and overstocking.
• The inventory accuracy formula is: Inventory accuracy= (counted units / on record) * 100
• Barcodes and warehouse management software are two examples of technology that can help improve inventory accuracy.
• While technology is great, it’s not a replacement for physical inventory counts.
• Instead of full inventory counts, cycle counting in smaller batches improves accuracy without disrupting operations.
• Establishing standardized processes helps employees follow best practices and reduces mistakes.
• Well-trained staff are more accurate, leading to fewer errors and better overall inventory management.
• Monitoring and refining processes while leveraging tools will drive long-term business success.

For any business that carries physical goods, inventory accuracy is crucial. It ensures that you have the right products on hand and helps avoid problems like stockouts (or overstocking) while ensuring smooth operations. Inventory accuracy also goes a long way in keeping business owners informed about their company’s financials. 

Inventory accuracy is arguably even more important for small to medium-sized businesses (SMBs) since they often operate on much smaller profit margins, which means there’s less room for error. 

That’s why, today, we’ll be going over some strategies to help your business improve its inventory accuracy. Some are simple, while others are more complex, but each has merits. There’s a lot to go over today, so let’s get right into it!

What is inventory accuracy?

Inventory accuracy measures how closely a company’s recorded inventory levels match the actual physical inventory number. As mentioned above, inventory accuracy is crucial for avoiding various issues, such as stockouts or excess inventory. Problems like these can cripple your business, so it’s worth trying to stay ahead of them. 

What is the inventory accuracy formula?

Luckily, calculating inventory accuracy is pretty simple. You just need to use the inventory accuracy formula, which looks like this: 

Inventory accuracy= (counted units / on record) * 100 

Simple, right? Let’s put it to work with an example. Imagine you own a tile business- you’ve got lots of little squares to keep track of. Let’s assume that your records say there are 2000 units available. However, after a cycle count, you realize you only have 1500 units on hand. 

Putting those into the equation, we get the following: 

Remember—because we’re multiplying by 100, we express the answer as a percentage. Therefore, your inventory accuracy is 75%, which is considered subpar. It’s best to keep your inventory accuracy as high as possible, usually 95% or higher. 

Common challenges in maintaining inventory accuracy

If you struggle to maintain high inventory accuracy, you’re not alone. Many SMBs face hurdles in keeping their inventory records accurate. Here are some of the most common challenges you’ll face: 

• Human error—As much as we try to avoid it, human error is a constant. People are going to mess up. There’s no way to prevent it entirely, but you can minimize it.
• Theft—Most of the time, employees are good and trustworthy, but there’s always the occasional bad apple. Sometimes, those people will take advantage of your trust, so always remain vigilant.
• Inventory shrinkage—The most common and costly reason for poor inventory accuracy is inventory shrinkage. Its causes can range from poor inventory control to employee theft and outdated technology.
• Outdated technology— Technology is great. Obsolete technology, on the other hand, can cause all sorts of headaches. Make no mistake, using technology is a good thing, but make sure it’s not actively hindering you. You don’t need the latest and greatest, but you will need something that works as intended.
• Lack of regular audits—Don’t fall into the trap of thinking that using technology exempts you from doing inventory audits. You’ll still need to perform them regularly to maintain a high inventory accuracy.
• Seasonal fluctuations—The market answers to consumers, and consumers answer to the seasons—sort of. At the very least, very few people will buy winter jackets during the summer, and vice versa. These fluctuations can muddle the numbers, making it challenging to retain inventory accuracy.

5 ways to improve your inventory accuracy 

If you know your inventory accuracy, you’ll have a much better understanding of where you’re falling short. No matter how well you manage your inventory, you’ll never avoid inventory shrinkage altogether. The trick is to minimize it as much as possible. Here are some tips to help you improve your inventory accuracy. 

1. Use barcodes

Barcodes are the rock stars of inventory management, and for good reason. Employees can scan a barcode instead of painstakingly looking up product information. Barcodes save time, help track product flow, and reduce human errors. There is no denying that barcodes are the easiest way to increase your inventory accuracy dramatically. 

Beyond improving inventory accuracy, barcodes are great for many different use cases, such as asset tracking. Some businesses get really creative and even use barcodes for shelving and documents. Fun fact: inFlow has a built-in inventory barcode system that allows you to create barcodes for any of your products with just a few clicks.

2. Implement warehouse management software

We humans are terrible at keeping track of a lot of little things at once. There’s no question about it. That’s why most modern businesses rely on warehouse management software. They use computers to track product flow in real-time, and while errors are not unheard of, they produce far fewer than manual data entry methods. 

The best part? Many solutions, like our software inFlow, are cloud-based, meaning you can access them from nearly any device with an internet connection. They can even help make your dreaded cycle counts more manageable. 

3. Perform regular cycle counts

It’s no secret that cycle counts are tedious and time-consuming, so some businesses avoid them altogether. However, we can’t stress enough how much of a mistake this would be. Cycle counts are necessary for anyone who wants to track and improve their inventory accuracy.

Instead of counting everything at once, cycle counts divide products into different subsets of inventory. Businesses then count the products in these categories one by one. This simple but effective method of compartmentalizing counts results in greater efficiency. 

4. Establish standardization

Every business has different needs. For example, a chemical company will have a different process for handling its inventory than an auto shop. It’s essential to make your own rules and stick to them, as deviating could prove confusing. 

Whatever your industry, establishing your own standardized processes pays off. It gives employees something to reference and makes the overall goal more transparent. When everyone follows procedure, identifying and preventing mistakes in your inventory accuracy becomes much more manageable.

5. Invest in employee training

If inventory is the lifeblood of your business, then your employees are the heart. After all, they’re the ones who push the inventory through your business by receiving, picking, packing, and shipping. It’s worth investing in their training in order to bring them up to speed on the proper procedures and processes. There’s an initial investment that goes into adequate employee training, but it will go a long way in improving your inventory accuracy in the long run. 

Final thoughts

The inventory accuracy formula gives you more than just a random data point—it highlights the efficiency and reliability of your entire business operation. If you maintain accurate records, it’s going to help you optimize your workflow and ultimately improve your profitability.

Improving your workflows involves leveraging tools like warehouse management software, barcoding systems, and cycle counting. Consistently monitoring and refining these inventory processes will lead to long-term business success. We guarantee it! 

The post 5 Proven Tactics to Improve Inventory Accuracy and Streamline Operations appeared first on inFlow Inventory.

• Automated inventory management systems use barcodes, real-time updates, reorder points, and integrations to reduce human error and increase speed.
• The benefits of automated inventory tracking include improved workflow efficiency, fewer errors, and improved demand forecasting.
• Key features in automated inventory management software include barcodes, perpetual inventory tracking, integrations, reporting, and reorder point notifications.
• Implementation involves identifying business needs, setting up automation like barcodes and integrations, and calculating reorder points.
• Automation will save businesses money through reduced labor requirements, faster workflows, and minimized errors.

AI and automation seem to be all anyone talks about these days, and as it turns out, there’s a pretty good reason for that. It’s hard to ignore the value AI and automation bring. These key features can help businesses through process automation, predictive analysis, and automated inventory management.   

So, today, we’ll focus on automated inventory tracking, including its benefits and what to look for when implementing an automated inventory management system. 

What is an automated inventory management system? 

Inventory management, in theory, is pretty simple: track products and assets as they move through your business. In practice, though, it’s much more complex. You’ll need to juggle many moving pieces, like sales orders, purchase orders, stock levels, price, inventory movement across multiple locations and sublocations, and so on.

Manually tracking these things is possible but usually inadvisable. Human error is a constant, and we are especially susceptible to mistakes when performing repetitive, menial tasks. Automated inventory management seeks to remedy this by using software to minimize the need for human input. Automated inventory management software achieves this through various means ranging from barcodes to automated reorder notifications.

Unlike humans, computers are great at handling repetitive tasks. They can also integrate with other systems, making them ideal tools for many different applications. 

What are the benefits of automated inventory tracking?

Automated inventory management has two main benefits: speeding up workflow and reducing human error. This is where barcodes shine. Scanning a barcode is much easier and faster than manual data entry, not to mention much more accurate. While barcodes may not be the most exciting automation available, they arguably bring the most value.

Scanning barcodes may only save you a few minutes here and there, but that time will add up quickly. Not to mention, barcodes work in a very binary way; they either scan or they don’t. Unlike manual data entry, where it’s easy for someone to make a mistake.

Automated inventory tracking is also a great way to protect your business from the unexpected. Inventory management software like inFlow has built-in reorder points, which means when your stock levels dip below a specific level, the system will send an automated notification to let you know it’s time to order more. If you’d like to see machine‑learning forecasting in action, you can book a demo with StockTrim—a forecasting add‑on for inFlow that analyzes sales data and suggests when to reorder.

Another incredible benefit is the data that inventory tracking yields. Automated inventory management software tracks sales as they happen, providing a comprehensive log of when they occur. Collecting this data will improve a business’s demand forecasting in the long term. These forecasts help guide business decisions and can also help identify cost-saving measures.

Key features for automated inventory software

Not every automated inventory management software functions the same, but unsurprisingly, they tend to operate on the same principles. In the same vein, there are some must-have features that any automated inventory management system should have (some of them we’ve already touched on).

Barcodes 

We’ve mentioned barcodes a couple of times already, and that’s because much of automated inventory tracking hinges on them. When an employee scans a barcode, the machine matches it to the relevant product within the barcoding software. This simple function allows you to automate several tasks, such as picking, stock adjustments, cycle counts, and more. Without barcodes, the efficacy of automated inventory management decreases drastically. 

Real-time tracking

Real-time tracking means that inventory information updates whenever a change occurs. Accurate assessment is crucial when making business decisions; real-time tracking always provides an accurate picture. This is particularly useful when your business operates from multiple locations. When you take something from one location, all other locations will be automatically updated. 

Integrations

These days, businesses often rely on multiple different software solutions to perform various tasks. For example, you might use inFlow for automated inventory management and QuickBooks Online to handle accounting and other financial information. It’s important that these systems can talk to one another, which requires a robust list of integrations.

For instance, inFlow integrates with QuickBooks Online, which automates two-way payment sync. This allows you to push payments from inFlow to QuickBooks Online and pull payments from QuickBooks Online to inFlow—no more double data entry.  

Reporting

Inventory management software stores quite a bit of data. It collects sales information like quantity, date of sale, price, and so on. This data is super helpful, but organizing and analyzing it in a meaningful way can be tricky. Thankfully, automated inventory management software will handle the grunt work for you. As a result, all you need to do is click a button to generate various reports easily. 

Reorder point notifications

Inventory drives revenue—without inventory, there can be no purchases. That means you’ll need to stay on top of your inventory levels to avoid potential stockouts. Reorder points are a great way of automating this process. They ensure you maintain the perfect balance of stock to prevent both stockouts and carrying excess inventory.

How to implement an automated inventory system

If you’re looking to implement your own automated inventory management, it’s important to remember that your needs are unique. Even businesses operating in the same sector or niche may have different procedures. For that reason, we can’t offer a perfect guide to finding a solution, but we can provide some general steps. 

First, identify your business needs. Are you looking to improve the accuracy of your stock level records? Are you trying to reduce inventory shrinkage, or is there something else entirely? Your business needs will ultimately decide the ideal solution, so it’s important to know what exactly you need while looking. 

Once you find an automated inventory management solution with all the features you want, you’ll need to set up your automation. This step is easily the most time-consuming but is a one-time process. Once you’re set-up, you should be good to go for a while. 

If you plan to use barcodes, you must generate, print, and label all your inventory. To use reorder points, you’ll need to calculate them for each of your products. If you’re interested in integrating your various software solutions, you’ll need to go through the process of connecting your software solutions. 

Does it save money for small businesses?

Short answer: yes.

While automated inventory management software often has a recurring cost in the form of a subscription, it still saves money in the long run. This is mainly because it dramatically reduces the need for staffing. Labor is expensive, and reducing workforce requirements while allocating it elsewhere is a tremendous boon. 

This is without taking into account additional costs incurred by human error. Human error can be exorbitantly costly, and avoiding it as much as possible is yet another reason to favor automated inventory tracking. 

The post Avoid Costly Mistakes with Automated Inventory Management Software appeared first on inFlow Inventory.

• Inventory shrinkage is the loss of stock due to factors like errors in inventory management, damage, or theft.
• High inventory shrink will increase the cost of goods sold (COGS) and decrease profit margins.
• Poor inventory management techniques, human error, and theft are the most significant contributors to inventory shrinkage. 
• It’s almost impossible to eliminate inventory shrinkage, but there are ways to reduce it.

Running a business comes with plenty of challenges. You’ll need to balance customer demand, manage cash flow, and stay ahead of competitors, to name just a few. On top of these everyday pressures, inventory management presents its own hurdles. Business owners must ensure they have the right products available at the right time while avoiding stockouts and overstock. But even the best-laid inventory plans can be undermined by an often-overlooked issue: inventory shrinkage.

This is a common yet costly issue faced by businesses of all sizes, and unfortunately, no one can avoid it entirely. But what is inventory shrinkage? How does it affect your business? And, most importantly, how do you combat it?

What is inventory shrinkage? 

Inventory shrinkage is an umbrella term that businesses use to refer to inventory losses that were not part of sales. For example, let’s say that a business has 200 product units. Out of those 200 units, they sell 180 but then fail to find the other twenty. That’s inventory shrinkage in a nutshell. It’s missing inventory that a business purchased but can’t sell for various reasons, which we’ll go into more detail later.

How to calculate inventory shrinkage

You can calculate inventory as a value, a unit figure, or a percentage. Fortunately, the formulas to calculate inventory shrink are pretty simple. We’ll use our example from above for the sake of these equations.

Value 

The equation to calculate shrinkage as a monetary value is as follows: 

Inventory shrinkage = inventory book value – inventory actual value

For the sake of this example, we’ll assign a unit value of $5. That means the inventory book value is $1000, and the actual value is $900. When we say actual value, we mean the actual realized gain you received from selling the items. Plugging those into the equation, we get the following.

Inventory shrinkage = $1000 – $900

Inventory shrinkage = $100

Therefore, the business lost $100 worth of items due to inventory shrinkage. 

Unit 

You can use the same equation to calculate unit shrinkage. Just substitute value with units. Here’s what that looks like: 

Inventory shrinkage =inventory book total – inventory actual total

And we already have these figures; 200 and 180 respectively. 

Inventory shrinkage= 200 – 180

Inventory shrinkage = 20

Therefore, the business lost 20 units due to inventory shrinkage.

Percentage

Calculating the percentage of inventory shrinkage is a bit more complicated. Instead of calculating the percentage of units missing from the whole, you’ll calculate the total value missing. This gives a more accurate picture of how much inventory shrinkage costs a business. Here’s what the equation looks like. 

Inventory shrinkage = (shrinkage value / book value) x 100

We’ll reuse the value figures here, just in a different order. 

Inventory shrinkage = $100 / $1000 x 100

We can remove the dollar sign without consequence here. 

Inventory shrinkage =0.1 x 100 

Inventory shrinkage = 10%

Pretty simple. Right? Unfortunately, despite that simplicity, inventory shrinkage has major implications for affected businesses. 

How does inventory shrink affect businesses?

Inventory shrinkage is pretty much always a net negative for businesses. There are some peripheral cases– like with charity– where they may be overall neutral, but those are exceptions, not the norm. Aside from the obvious monetary loss that comes with inventory shrinkage, there are other impacts on your business. Here are some of the major ones.  

Increases COGS 

Generally speaking, businesses purchase products in bulk. It decreases the cost per unit, in turn lowering the cost of goods sold (COGS). Inventory shrinking effectively increases the cost per unit, which in turn increases the COGS.

Incur additional costs 

Missing inventory means ordering replacements. Some businesses might forgo replacing missing products, but they’re still losing money at the end of the day. With that said, inventory forecasts are becoming more and more precise, which means even a few missing units may result in missed sales opportunities. Leveraging forecasting software such as StockTrim helps anticipate demand accurately, minimizing over‑stocking and shrinkage.

Price increases

Increasing your prices is one way to offset the impact inventory shrinkage has on your business. Of course, the obvious downside is that customers may look elsewhere. Since inventory shrink is pretty much a guarantee for any business, it should be priced into your unit cost. This way, you can avoid having to raise prices unexpectedly. 

Loss of brand loyalty

Inventory shrinkage causes revenue loss in other ways than the monetary loss of physical products. Not having a specific product available will not only mean your customers will look elsewhere but also hurt your brand loyalty. 

Common causes of inventory shrinkage

Many things can lead to inventory shrink. Some of them are relatively benign, while others involve outright crimes. Something to note here is that the average inventory shrinkage for US retailers has been increasing by 1.6% in 2022. That 1.6% might seem small in the grand scheme of things, but it equates to nearly $100 billion in lost revenue. 

Theft 

Shoplifting and organized crime make up a large portion of inventory shrinkage for retailers. Employee theft is also common, but it’s crucial not to make baseless accusations. Depending on the type of product, it may be a more frequent type of theft. Small electronics are valuable and easy to hide, for example.

Spoilage 

Inventory shrinkage just refers to unsold inventory. That doesn’t necessarily mean that it’s missing; it’s just that a business can’t sell it to a customer. For example, shrinkage is a big issue in the restaurant industry, where they almost exclusively use perishable goods. 

Human error

When all is said and done, human error is a constant. You can’t eliminate it entirely, no matter how hard you try. Maybe one specific employee was tired, maybe the shipping company didn’t secure things as tightly as normal. Whatever the case, there’s bound to be human error present in some way. 

Ways to reduce shrinkage

To be clear, eliminating inventory shrink is nearly impossible. There’s simply too many moving parts, and at the end of the day, human error is a constant. However, that’s not to say there aren’t ways to protect yourself from inventory shrinkage and ensure you keep it to a minimum. 

Practice lean operations

Lean inventory is a method that minimizes the amount of inventory that a business carries. You can think of it like this: if “normal” inventory is an ocean, lean inventory is a river. It means carrying little to no surplus. Instead, lean businesses carry just enough to fulfill orders. This lowers overall operation costs and reduces the number of errors by reducing the amount of inventory. A good example of this would be just-in-time inventory (JIT).

Perform regular counts

Counts are an essential part of staying on top of inventory. Regular counts keep information accurate. However, they’re a massive undertaking, so doing them too often could result in a lot of operational downtime. It’s best to plan them on a periodic schedule and stick to it. 

Use inventory software 

Another great way of reducing errors is by using software. Computers can complete simple tasks much quicker than humans and with fewer errors. These errors are also usually easier to fix or solve. For example, an inventory management system tracks product flow in real-time– and will help you identify where inventory went missing. 

How inFlow can help reduce inventory shrinkage

Trust me, we know how frustrating inventory shrinkage can be. It’s one of the common reasons some customers have started using our inventory management software, inFlow.

Our software gives users real-time inventory tracking with multi-location support. We have a built-in barcoding system to help reduce human errors and speed up your workflow, a robust reporting feature, and stock-level alerts. We even allow you to restrict user access, which will help reduce theft.  

So, if you want to start reducing your inventory shrinkage, consider giving inFlow a try. We promise you won’t regret it!

The post Effective Strategies to Prevent Inventory Shrinkage appeared first on inFlow Inventory.

• MRO inventory stands for maintenance, repair, and operations.
• It’s a specific class of inventory that refers to materials and supplies used to keep business operations running. 
• MRO inventory is not a part of the final product.
• Properly managing MRO helps a business operate more efficiently and increase profits. 
• Poorly managing MRO can cause a loss in profits due to downtime, production issues, and unsafe working conditions. 

When you’re running a business, you’ll need to manage a lot of different types of inventory. Most companies focus most of their attention on product-related inventory, such as raw materials, components, and finished goods. But there’s another type of inventory that’s just as crucial to keep everything running smoothly: MRO inventory. 

MRO inventory (maintenance, repair, and operational), which encompasses supplies, tools, and equipment, plays a crucial role in any business. It ensures that operations stay on schedule and productivity remains as high as possible. So, what is MRO Inventory? What role does it play, and why is it important? And how should businesses manage it? Let’s look at this often-overlooked inventory type in more detail.

What is MRO inventory?

It’s fairly easy to guess what the MRO meaning is. Also called MRO supplies, it refers to inventory a business uses during production. There’s a caveat, though: MRO inventory can’t be part of the final product. Anything used during the production process that becomes a part of the finished product would be considered raw materials or components. 

For example, take an electronics manufacturer that specializes in semiconductors. The assembly of the semiconductors requires various metal pieces, silicone, and epoxy. It also requires personal protective equipment (PPE) and tools to assemble the pieces. In this example, the raw materials are the metal pieces, silicone, and epoxy; the PPE and tools are the MRO inventory.

However, MRO inventory doesn’t just relate to things directly used in the production of the semiconductors. A plethora of other things that assist in business operations also fall into this category. For instance, scales, pallet jacks, and machinery would also qualify as MRO inventory.

These items are essential to the production process but absent from the final product. As a result, we can classify these products as MRO supplies.

MRO inventory examples

There are a slew of things that can be considered MRO inventory. It really depends on what type of business you’re running. Manufacturers tend to have more MRO inventory to worry about, but make no mistake; every business has MRO inventory. Here are some common examples of MRO inventory:

• Consumables – Cleaning supplies, light bulbs, and cleaning solutions.
• Maintenance supplies – Lubricants, tools, cleaning equipment, and janitorial supplies.
• Operational supplies – PPE, printer paper, printer ink, staplers, paper clips, and other office supplies
• Repair parts – Motors, gaskets, springs, seals, filters, and any other replacement parts needed for equipment. 

Generally speaking, businesses can break down MRO inventory into three categories:

• Production MRO – All parts, tools, and equipment necessary to keep processes running would fall into this category. 
• Administrative MRO – This category is for any items used in the day-to-day business operations, such as office supplies and IT hardware. 
• Facilities MRO – Any items used to maintain your place of business belong in this category. This includes things like light bulbs and safety systems.

Why is MRO important?

New businesses or companies tend to overlook MRO inventory. In some ways, it’s understandable. After all, it doesn’t generate revenue, so why spend time and resources on it? Well, because it does generate revenue. Just not directly. There’s a famous saying: “A penny saved is a penny earned.” 

It’s a saying that applies to running a business. Saving a penny on overhead costs is just as good as earning an extra one. Properly managing MRO inventory is what gives a business the ability to operate in the face of suboptimal conditions. 

Properly managing MRO inventory will ensure your business is always running smoothly and prevent unnecessary downtime. 

What are the benefits of proper MRO management? 

Companies who take the time to manage their MRO supplies see quite a few benefits. We briefly touched on some already, but here’s a more detailed explanation of the benefits. 

Workflow efficiency 

Staying on top of MRO inventory generally leads to higher efficiency. While mistakes and accidents will inevitably happen, mitigating the effects goes a long way in increasing efficiency.

Cost reduction 

At the end of the day, MRO inventory is just that: inventory. And as a result, properly managing it can cut operating costs. However, purchasing MRO supplies and adequately managing them can be tricky. More on that later. 

Longer equipment lifespan

Generally speaking, when you keep up with the maintenance of your facility, equipment, and tools, you’ll increase their life span. While it may cost more money in the short term, it’ll pay off in the short term. Think of it as an investment in your business. Properly maintained equipment also operates more efficiently, increasing overall productivity. 

What are the consequences of neglecting MRO inventory?

Depending on the industry and manner of products/services provided, there are many possible consequences of neglecting MRO supplies. They can range from delays and downtime to lawsuits and a total shutdown. 

Let’s go back to our imaginary electronics company. Say the facility runs out of PPE supplies, and rather than shut down production, the company opts to keep things running. As a result, during production, a mishap leaves one employee with an injury. Something small like that could severely damage the company, not just financially but also its reputation. Not to mention, depending on the industry, neglecting equipment may also go against regulations, which could be grounds for hefty fines or worse. 

A more innocuous example would be if your business ran out of light bulbs. While it may seem like a silly inconvenience, it would make it hard for staff to work effectively in the dark. 

MRO best practices

Like any other inventory management endeavor, properly managing MRO supplies can be challenging. For starters, traditional forecasting methods, like market trends and customer demand, don’t apply to MRO inventory. However, that doesn’t mean there aren’t some best practices you can follow. Here’s a few to help out. 

Classify and rank MRO inventory 

Not every MRO product is of equal importance. For example, fixing equipment is more important than repainting it. Figuring out which MRO inventory is more important than others lets businesses prioritize mission-critical equipment above all else. Over time, companies can use this data to help them create a restocking cycle. 

Implement safety stock and reorder points

Knowing limits is important. Especially when it comes to MRO supplies, it’s best to purchase as little as possible, while ensuring you don’t run out of stock. To do this, choose realistic reorder points and safety stock levels for your MRO inventory. Remember, MRO inventory should still follow the same basic principles of inventory management, so you should always consider safety stock and reorder points. 

Know seasonal trends

The seasons affect most inventory in one way or another. For example, certain times of the year may require longer hours and more production time. This, in turn, will lead to more wear and tear on equipment, which means you’ll need more replacement parts. 

Make decisions based on data 

Most businesses collect a wide variety of KPIs (key performance indicators), ranging from sales volume to customer information. You may not be able to rely on sales data to predict your MRO inventory needs, but you can still look back at historical data. If you examine what you used in the past, you can better predict what you’ll likely need in the future.

Use software where possible

Before the digital age, everyone had to keep track of things by hand. The accessibility of computers has changed that. Now, software helps businesses across the globe with a variety of tasks. Our inventory management software inFlow can help track MRO inventory in real-time, and it offers integrations with other popular software solutions like QuickBooks Online and Shopify. There is also a built-in barcoding system that helps automate a ton of the work related to managing your MRO supplies.  

Conclusion

While often overlooked, MRO inventory plays a crucial role in nearly every business. It plays an indispensable role in ensuring that your business operations continue to run smoothly. Properly managing MRO inventory will minimize downtime, improve efficiency, and help control costs. In a world where time is money, effective MRO inventory management can provide your company with a strategic advantage.

The post MRO Inventory Best Practices for Small Businesses appeared first on inFlow Inventory.

Knowing when a business needs more space (and willingness to purchase that space) is important, but so is maximizing the use of what’s already available. In some extreme cases, optimizing warehouse utilization could reduce or even eliminate the need for additional space, at least in the short term. 

How to calculate warehouse utilization 

Warehouse utilization (also known as warehouse space utilization) is a figure that measures how much warehouse space a business is using. It can take the form of either a percentage or a decimal. 

Calculating warehouse utilization is fairly simple. Divide occupied space by total space. Here’s what that looks like as an equation: 

For example, let’s pretend that a business has 100 feet of storage available and currently uses 70 feet. Plugging those numbers into our formula yields the following: 

70/100 = 0.7

In this example, the warehouse utilization is 0.7, or 70%. 

However, there are a few different methods to calculate warehouse utilization. In no particular order, they are as follows:

• The cube method represents volume.
• The floor method represents square feet.
• The slot method represents storage slots.

The method a business uses will change these numbers. Here’s a more detailed explanation of each method and how they affect warehouse space utilization. 

Cube method 

This method uses cubic feet, or volume, to calculate warehouse utilization. To calculate the total volume of your warehouse, multiply the width by length and then the result by height. For example, let’s say that a warehouse is 10 feet wide, 15 feet long, and 20 feet high. 

10 x 15 = 150

150 x 20 = 3000

In total, 3000 cubic feet of space is available. For this example, let’s say that out of that 3000, the business in question uses 1000 cubic feet. Plugging those into our equation above, we get the following. 

1000/3000 = 0.33, or 33.33%

If space is taken, it’s taken. So, for the sake of this example, we’ll bump these figures up to 0.34 and 34%, respectively. That means warehouse utilization is at 0.34, or 34%. 

Floor method 

The floor method is similar to the cube method but cuts out one dimension. It calculates warehouse space utilization by using square feet instead of cubic feet. To calculate available square footage, multiply the warehouse length by width. We’ll reuse the figures from above. 

10 x 15 = 150

In total, 150 square feet of space is available. For this example, let’s say that the business in question uses 72 of that 150. Plug those into the warehouse utilization formula. 

72/150 = 0.48, or 48%

Slot method

The slot method is a bit more complex than the other two. It relies on warehouse slotting, an organizational method, to calculate warehouse utilization. In simple terms, warehouse slotting involves creating “slots” that your products occupy. The size of these slots will vary from business to business. 

For this method, we’ll discard the previous figures entirely and say there are 20 total slots. We’ll also say that products occupy 5 of those slots. Plug those into the warehouse utilization formula. 

5/20 = 0.25, or 25%

What is a healthy utilization rate? 

You might have noticed that these numbers seem a bit low. The highest is 48%, which means 52% of the warehouse isn’t in use. However, bigger isn’t always better. In most instances, going higher than 85% causes congestion issues; even utilization as low as 25% can be “healthy.” 

Product isn’t the only thing inside the warehouse at any given time. Workers need space to move products and equipment; too little free space can prove hazardous. 

How can I optimize my warehouse space? 

Optimizing warehouse space brings a lot of benefits. Most importantly, it ensures businesses make the most of the space they pay for. This is crucial, especially when considering rising costs. It can also decrease the time it takes your business to expedite orders, increasing customer satisfaction. Here’s a few best practices to improve your warehouse utilization. 

Use vertical space efficiently 

Making use of all available space is obvious, but using it appropriately is less so. For example, you wouldn’t want a product that’s 2 feet tall to occupy a slot that’s 6 feet tall. It’s a waste of space, plain and simple. 

Improve warehouse layout 

Optimizing warehouse space isn’t just about fitting more products in the same area. Rearranging pallets and products alike to improve the flow of products can significantly increase productivity. Over time, increasing productivity in this manner pays off. 

Implement software

Efficient warehouse space utilization boils down to planning and organization. However, planning the most optimal routes for your inventory flow can be challenging. Software might not be able to do the (literal) heavy lifting, but it can help you better manage your inventory. inFlow’s warehousing software can automatically generate high-efficiency routes throughout any given warehouse, increasing pick-route efficiency. 

Consider other storage strategies

Of course, it’s also important to consider what warehouse strategy will work best for an individual business. Large products can be difficult to store, but the same goes for small ones. Generally speaking, there are three methods when it comes to organizing a warehouse: fixed location, floating location, and zonal location.

Fixed location 

A fixed location refers to a permanent, dedicated storage location for a specific product or stock keeping unit (SKU). Having a permanent location for high-demand products can substantially increase warehouse productivity. 

Floating location 

The opposite of fixed location, floating location (also known as random location) means storing products wherever they fit. It might sound antithetical to organization, but sometimes product catalogs change frequently. Sometimes, it’s best just to put things wherever there’s room. 

Zonal location 

A zonal organization scheme involves breaking warehouse areas into specific zones to hold specific product groupings. For example, perishable products might be on one shelf, and non-perishables may be on another. Breaking down warehouses into these zones can increase warehouse efficiency. 

Wrapping up

Making use of every available resource is crucial for a business’s health. Optimizing warehouse utilization, especially, continues to remain a key factor amidst rising operational costs. Additionally, optimizing warehouse routes and implementing proper organizational practices continue to play a role in overall efficiency.

The post Warehouse Utilization Strategies For Your Small Business appeared first on inFlow Inventory.