Best Practices For Effective Inventory Management and Greater Accuracy

The utility industry faces a constant challenge in maintaining proper inventory levels. Most warehouse managers incorrectly estimate inventory based more on gut feelings rather than any scientific method. This poses a lot of problems and you could end up writing off losses when inventory is high or fail to meet the needs of your customers when inventory levels are low.  

Determining optimal stock levels requires adopting scientifically driven processes. We’ve listed some of the best practices to optimize inventory levels and improve stock management:

Analyze your stock critically

Generate a business impact code for stock items by analyzing application, classification, supplier, price and other factors.

Forecast demand, lead time and issue size

Rationally predict future inventory needs by applying the right forecasting algorithms for each stock item. Using statistical algorithms, predict average lead time based on previous purchase orders and receipts. Determine the number of future units needed by analyzing the history of the issue and eliminating abnormal data that could lead to errors. 

Apply ‘What If’ inventory models 

Use ‘What If’ models to plan for contingencies. These models allow you to estimate inventory holding costs for products, total replenishment costs and emergency freight costs. Compare and contrast scenarios to discover optimal metrics and results.

Streamline reordering

To determine the right inventory to have on hand, you need to understand your reordering parameters (minimum and maximum stock levels). Consider demand, lead time, criticality, issue size, etc. Take storage capacity, standard pack and set sizes into account as well. 

Manage exceptions

High-value and problematic (slow-moving) items may warrant additional analysis and review. Make sure your system includes tools for assessing and managing exceptions. It should also offer a ‘search or filter by exception’ function for greater operational efficiency.

Organize and distribute inventory in a scientific manner

Categorize items by their usage and value, frequency of movement, availability, criticality, commodity and storage method. Generate policies to manage each category, such manual control of special items or when to dispose of obsolete stock. 

Assess spare part risks

Your workshop may require you to keep many costly spares. While these are critical to have on hand, they also have minimal expected usage and require prolonged lead times to receive. Manage such spares through risk modeling. Analyze the estimated time between demand and stock-out and apply decision-support software that forecasts when to buy new stock or when you can defer replacement. 

Pool the spares

Manage safety stock by keeping high value, rarely used items at multiple sites. Identify common spares appropriate for pooling, determine the ideal number of spares to hold and establish the best location to keep them. 

Capture first-hand information of the inventory

From floor level to the C-suite, knowledge of inventory levels and processes is essential for decision making, particularly in an asset-intensive industry like utilities. Knowledge helps avoid errors that may cost billions of dollars in lost revenue. Capture key data about all items in inventory, provide an audit trail for decisions and set reminders when reviews are due.  

Report key performance indicators (KPIs) for your inventory levels

When you scientifically determine your inventory KPIs, you can timely track and assess inventory management progress. You can also identify areas for improvement. 

There are several digital ERP applications available that can automate many of these steps, reducing the need to manually perform them. Gone are the days when companies relied on desktop systems that created a complete disconnect between upper-level management and warehouse staff. An enterprise mobile inventory management solution allows executives and staff to accurately track, manage or move inventory anywhere, anytime, while maintaining optimum inventory levels, cutting carrying costs and making customers happy. 

Innovapptive’s SAP mobile inventory management solution, mInventory, offers the perfect choice for the utility industry to manage the entire spectrum of inventory processes – be it goods receipt, goods issue, stocks audit, cycle counting, and more. It utilizes the best inventory practices for the utility industry while offering ease and comfort to operate at all levels.

To demo Innovapptive’s mInventory solution, click  SELECT A DEMO TIME. I WANT TO SEE A DEMO TODAY 

You can also speak with an Innovapptive Solution Expert via phone at (713)275-1804 or via email at sales@innovapptive.com.

 

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