Do you find yourself constantly rushing through a backlog of orders that never seems to diminish? Are you experiencing problems in shipping the right products to the correct customers? Are you making sales, only to determine that you lost money on them after all the costs are considered? These are just some of the common problems experienced by inventory managers in the wholesale and distribution industry.
Let's explore 3 approaches to solving these inventory problems:
Investing in People
Option one is a fairly obvious one — perhaps you are trying to run on too few staff. The more rushed employees are, the more likely they are to make mistakes. Hiring is often seen as a last resort, and for good reason, but sometimes it may be necessary in order to meet demand, prevent errors, and move the business forward.
The benefit of this approach is that additional employees will almost certainly help with backlogs. Depending on the employees' capabilities, it may be possible to deploy them in several different roles.
The downside, however, is readily apparent. Employees are not cheap. Even the lowest paid employees may cost you $20-30,000 a year, and while a warehouse employee will help with picking and packing, they will not likely be able to help out with accounting, admin or overall inventory management.
Investing in Processes
If it's been a while since you took a close look at your inventory processes, then that's a good place to start. With the appropriate processes defined and training on those processes in place, employees are more likely to be productive and accurate. Consult with someone who has extensive inventory management or operations experience to improve efficiency and reduce warehouse errors.
Process improvement can help solve many inventory problems, improve efficiency and address redundant or ineffective business processes.
Investing in Software
Investing in software is often an alternative to hiring additional employees. While a good system will not entirely eliminate the need to hire again, it can certainly reduce the number of employees it takes to operate effectively. At $20-30,000 a head, per year, it's obvious that a system that can save you even a single employee is worth some serious consideration.
When approaching the idea of a new inventory and accounting system, evaluate the cost of the new system against the cost of new employees that would have to be hired (without increased efficiency). An integrated system will also improve efficiency across the entire business.
None of these approaches is mutually exclusive — you may need to "mix and match" these approaches. Certainly, a combination of at least 2 of these approaches could greatly improve operations.