The most dangerous kind of waste is the waste we do not recognize – Shigeo Shingo.
Shigeo Shingo (1909-1990) was a Japanese industrial engineer and thought leader in the areas of productivity and operational excellence. He is widely considered the father of the Toyota Production System (TPS) and his principles remain so influential that the Shingo Institute was set up to continue his work.
Shingo firmly believes in avoiding waste and improving processes so that every interconnecting part is systematic, purposeful, and of value to the customer. This invariably leads to better outcomes for a business and its customers.
Many of today’s inventory management best practices can be linked back to Shingo’s principles.
Find out how you can apply some of Shingo’s ideas and make your inventory management system as methodical, hard-working, and rewarding as possible.
Avoid wasting time, effort, and money through an inefficient system by sticking to these 4 best inventory management practices and considering an automated inventory management system in Dubai or wherever you’re located.
Best Practice for Retail Inventory Management
1. Prioritize key stock items.
Categorizing your inventory means that you can label items according to their priority level.
Must-have, high-demand items can be identified and prioritized for reordering over less in-demand stock. Slow-moving stock can be costly by taking up valuable warehouse space or being leftover at the end of a season.
Operating a system that allows you to prioritize stock is often referred to as ABC analyses, with A being the highest priority items, B medium, and C lowest.
Operating on ABC analyses means you can prioritize space in your warehouse and make sure you never run out of the products your customers need most while minimizing the risk of costly leftover stock. An agile, flexible inventory management system should allow you to recategorize stock easily so that you can respond to consumer demand and retail trends quickly.
2. Establish inventory management KPIs.
KPIs measure progress against a target across a predetermined period of time. KPIs in inventory management are just as essential as in any other area of business, but they are sometimes overlooked or not prioritized.
Remember that streamlined, effective inventory management is the only way to avoid waste and ensure you have the right stock in front of customers when they need it.
Here are some inventory management KPIs we recommend you use:
- Cost of carrying inventory that tells you how much it is costing to hold and store your inventory.
- Your stock-to-sales ratio, which tells you where you have too little or too much stock.
- The sell-through rate usually indicates where you have priced too high.
- Weeks on hand tells you where slow-moving stock is proving costly.
- Backorder rate to work out where your inventory is not meeting customer demand.
- Time to receive which is an average of how long it takes received stock to be ready to sell.
- Shrinkage alerts you to patterns of disappearing stock that may be caused by theft, human error, or supplier fraud.
3. Forecast demand.
It’s vital to keep an eye on seasonality, trends and the current economic climate in regards to your stock.
Demand forecasting should be a team effort with contributions from sales and marketing departments as well as those responsible for inventory management so that the warehouse is appropriately stocked.
4. Embrace automatization.
Automating asset tracking and inventory management frees up resources. It also gives you a real-time view on exactly what stock you have and where it is.
Use the data an automated system provides to track KPIs at any time, forecast demand and run your warehouse efficiently. There are exciting products on the market that can do this, including our RFID asset tracking solutions.
What RFID asset tracking solutions can do
Our RFID asset tracking system provides accurate and flexible inventory management solutions to businesses in Dubai and all over the world. Here are some of its key features.
- No line-of-sight scanning is required; RFID tags can be read from any orientation, unlike traditional bar codes. Scanners can also read multiple tags simultaneously. This vastly simplifies the procedure for checking stock in and reduces the time to receive.
- Tags are weatherproof and can reliably hold a lot of data, yet they are small and slimline enough to be used for document tracking.
- As well as faster scanning, RFID software offers real-time updates so that you also have a handle on stock levels and locations.
- Automatic updates and backups are offered so data is always reliable.
- Advanced software allows you to perform analyses and monitor KPIs.
We can provide a variety of RFID mobile devices to suit your business needs.
Why not get in touch today to discuss how RFID can work hard for your business, eliminate waste and streamline processes?