What are some common mistakes in inventory management?
- Lack of performance measurement
- Inaccurate inventory forecast
In the Philippines, inventory management is a crucial part of many businesses. What you earn and what you save depends largely on how you handle your inventory. Any company that attempts to optimize their inventory processes can experience both improvements as well as experimental blunders. Since inventory management is a rather broad topic, it can sometimes get too complicated for just one professional to handle.
With that being said, there are many inventory management training programs and software available. The knowledge needed to perform this properly can be easily found on various resources. But what you should focus on is the correct application of the concepts.
Just like in any industry, knowledge is not enough, you need to be able to use that information properly. When done properly, it can result in amazing improvements to your inventory processes. However, sometimes the execution is lacking and you end up making mistakes because of either insufficient knowledge or a failed application.
Don’t fret! Mistakes are nothing more than opportunities to grow. They indicate that there is still something better that you can do. Take a look at some of the common mistakes that happen during inventory management in the Philippines and see how you can improve on them!
Lack of Performance Measurement
In most cases, companies would measure your performance using different criteria. They would usually be composed of behavior, work ethics, procedural skills and talents, and many more. It is used to evaluate the overall performance of an individual. That means most of the things required or expected of you will be assessed—something that is normal in almost every company.
Problems arise when the metrics in which employees are evaluated turn out inadequate. When the performance metric itself cannot be used to correctly evaluate an individual’s performance, then there can be discrepancies in concluding what certain people actually contribute to the company.
Without a solid understanding of what people can bring to your company, there’s a high chance that you’ll experience over- or under-estimations in your inventory management process. This can lead to inefficient procedures and an ineffective inventory cycle.
When looking for or creating a performance metric, you have to be realistic. You must take into consideration every aspect of work given to people as well as the standards by which you aim to abide by.
Inaccurate Inventory Forecast
More common among people who have only recently entered the field of inventory management, forecasting needs and demands can be quite challenging. The good thing is that there is software in place that helps in analyzing data and coming up with almost foolproof inventory forecasts.
However, you can’t just rely on computers for all of your forecasting needs. More often than not, a bigger portion of forecasting is related to the human psyche. You have to take note of what your consumers want. This human desire is not something that machines can calculate. Rather, it’s something that you understand by experiencing it firsthand.
People who rely too much on software for forecasting can miss out on many opportunities, eventually leading to a rather unremarkable sales forecast.
When forecasting future inventory needs, it’s important to take note of both statistics and humane factors. Remember, you’re selling to people, not to machines. You must analyze both variables in order to come up with a solid, almost fool-proof prediction of your inventory needs.
The most tedious part of inventory management is the need to keep things in check. You have to file every last item and ensure that they’re accounted for. You need to know the status of your inventory before, during, and after the sales process.
In essence, you have to keep track of your inventory from the beginning to the end of its time with you. It sounds easy to some, but when you think of it in the thousands, sometimes millions of units, you’ll probably get overwhelmed.
The more traditional businesses that have not embraced inventory management in the Philippines still use outdated software and even pen and paper to keep track of their stocks. Not only is this more time-consuming, but It’s also very taxing to the person in charge of it.
It would be best for you to use software that can integrate the whole sales cycle into one whole system. Find an inventory management system that has the capability to be integrated with point of sales systems in the Philippines and you might see improvements immediately!
Making a mistake when it comes to your inventory management efforts mean only one thing: you have more room to improve. By identifying the mistakes that you might be doing early on, you have the opportunity to fix them and eventually adopt the inventory management system and point of sales system in the Philippines that is well suited for your company!