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How Closely Should You Monitor Your Inventory?

02 Jul, 2019 | Business Tips, Inventory Management

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Inventory management software can streamline your inventory flow, keep products moving, and keep your backend in order. It is an invaluable tool for managing your products. If you fulfill many orders in any given day, you have to have some kind of system in place to track what you have, when, and where it is.

Inventory management software is often integrated through automation. It is the great big secret of the best inventory management practices, and it saves you a lot of time and money. You are not stuck needlessly tracking and monitoring your inventory at a micro level.

But can you take this too far? Is it possible that you can actually not manage enough?

It is a peculiar question, especially when so much discussion around inventory management software revolves around implementing automation. But the secret to automation is knowing when and how to use it. Go overboard and you can make costly mistakes.

Alerts and Approvals

How closely should you monitor your inventory? The big part of the answer has to do with alerts and approvals. It works as follows. You can set a par level for a product. This may pertain to the lowest count you are willing to allow in your active stock. When an item hits a par level – let’s say three in stock for the purpose of this exercise – you receive an alert. The you in this case could be any staff member who you best think should be informed of this stock level.

A party is now alerted to the par level. So how can they respond? Administrators can set up an approval process within the software management. In short, the system will automatically reorder the product only if it meets the condition of approval. Whoever received the alert can approve a reorder in a single click. But the important step is the approval.

It helps answer the question of how closely stock levels should be monitored. In this example, you are only alerted once you approve the order. Full automation would mean the order is made regardless of approval.

Why is Full Automation (Sometimes) Bad?

“Full” automation in this example could have some frustrating ramifications. There are definitely some circumstances that may apply.

  • The reorder price per product is exorbitant, confirming an automated reorder on a product you may no longer make a profit on
  • The item is on a waiting list, causing you to possibly pay for a reorder you may not receive for months.
  • You over-exhaust a particular financial account
  • You forgot to turn off the reorder
  • Because you automated the reorder, you can fall victim to any of the above scenarios.

With alerts and approvals, you are buffering yourself from a potential unwanted reorder. It is a great way to watch over your stock when it matters, but still keep a healthy amount of automation on the table.

Only you can determine how close you want to watch your stock levels. If you only have one product, it may be easy. If you are juggling hundreds of products with distinct seasonal slants and variable pricing, close inventory management could be a huge time waster. You need to consider what is most important and what you can automate, and create a healthy balance between it all.

We can help answer a lot of questions regarding inventory management, including how and what to automate and to what degree. Contact our team for further details about inventory control. Our DEAR Inventory system can help you create productive automated processes, but with reasonable checks and balances so you can avoid many of the situations above.

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