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Tips To Maintain Accuracy Of The Inventory

It is always important to maintain the accuracy of inventory to run an organization properly. As matter of fact, the purchasing of materials and supplies by the procurement department actually depends upon the accuracy of the inventory. Similarly, it is also important to have an accurate inventory to plan and schedule productions efficiently.

inventory management by Denby Distribution Auckland New Zealand

 

Accurate Inventory Management:

A good inventory managements system can help companies to formulate policies and procedures to monitor their inventory and following lines explain how.

  • Proper Material Handling Process:

The company should formulate proper procedures for handling of material within and outside the company. These procedures should explain how employees are supposed to bring parts into the company and transactions of parts within department and in and out of the stock such as during production. These inventory management procedures should also detail how employees will handle defective parts and scrape material.

  • Train Employees:

Another important aspect of inventory management is the training to of the staff about inventory procedures. Each employee should understand how accurate inventory is important for the company. Similarly, separate training sessions should be conducted for the production department and the receiving or stocking department.

  • Implement Audit:

No matter how good your inventory management system is, you simply cannot maintain the accurate inventory if you do not conduct periodic audits. These audits can verify if the workers are following the inventory procedures in addition with checking whether inventory is according to the records or not.

  • A Cycle Counting Procedure:

A continuous counting process is another important aspect of good inventory management. It is basically based on how valuable a certain item is and what is his frequency of use. It is up to the company to determine which item will undergo counting after how many months. For instance, a critical path that is most frequently used will can undergo counting twice a month but a normal item may be subjected to counting cycle after 3 months.

  • Plan Annual Physical Inventories:

Companies can also adjust quantities to clean the system by planning bimonthly, quarterly or annual physical checks. The discrepancies discovered during these checks will also determine how effective the procedures and counting cycles of the company are.

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Inventory Management forms the backbone of any organization NZ

The supply chain and inventory management forms the backbone of any organization. Inventory can be defined as an idle stock of physical goods having some economic value maintained by any organization. These goods are stored in various shapes and that can be processed, packed, transported and sold at any time in future.

Reasons of Inventory Management:

Different companies maintain inventory for different reasons. However, some of the most important factors that force companies to maintain an inventory are given below.

inventory management New Zealand by Denby Distribution

 

  • Helps in Meeting Seasonal Demands:

Demand orders received by companies are seasonal that mostly depends upon various festivals or seasons etc. The past record of the companies helps them to predict potential sales. Therefore, these companies maintain a reasonable inventory to propel their production at the peak time and rush their products to the market.

  • Meet Variation in Production Demand:

An effective system can also help to accommodate a changed production plan that is influenced by factors like estimates, sales, orders and socking patterns. Similarly, holding inventory in or nearby a production plant will assist in providing raw materials to maintain the production speed.

  • Economies of Sales in Procurement:

It is much cheaper for a company to buy raw materials in bulk rather than buying small lots. Inventory management is the process that provides complete storage solutions and thus impacts the overall profits of the company as well.

  • Reduces Transit Costs and Times:

Similarly, it can be quite costly to buy raw materials from foreign countries or from a far of place within the country. Therefore, if company buys the raw material in bulk, it can safe considerable amount of money in terms of transportation, shipment and transit time costs. Similarly, bulk purchase can also help to minimize the impacts of problems like unexpected delays in delivery, strikes and power failures.

  • High Demand Items:

The main purpose is to provide storage solutions for high demand items that sometimes have lead life of several months. Thus, if a certain material goes high in demand but its supply is low, companies can overcome the problem by issuing that item to production line from the inventory stores.

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