The successful management of an item inventory can save a company an enormous amount of money and, in addition to saving costs, offer great benefits. It therefore pays to take a critical look at all inventory management processes and see where improvements can be made. In my experience, many companies underestimate this and do not realize the benefits they can achieve by managing their inventory better.
Cost and necessity
Having inventory costs money; after all, it must be purchased. Stock also has to be stored and insured. All costs you want to keep to a minimum. But having stock is also necessary. After all, a market demand has to be met. In addition, to provide the right level of service, you want to have a certain minimum inventory. And sometimes, because the price is low at the time, more than normal will be purchased. So there is definitely a need for having inventory as well.
Customer satisfaction and service
What spare parts management is ultimately all about is providing the right service to the customer. Not being able to deliver what was promised or too long delivery times lead to dissatisfied customers, which of course does not benefit sales. Accurate and real-time insight into the inventory leads to faster action and thus faster delivery.
Good insight and efficient management
An accurate understanding of item inventory also helps in managing it more efficiently. Knowing what is in stock and where exactly it is in stock helps with this. Insight into the turnover rate of articles is also important here in order to determine whether and where there may be too much or too little stock. And this insight, in turn, helps you manage inventory.
Optimizing inventory
An important consequence of this is that the total warehouse inventory is not necessarily reduced but thus optimized, or in other words the right inventory at the right time in the right place. However, experience shows that for many companies this does result in a net reduction in inventory. Reductions of 50% are achievable for some companies. The optimization of inventory will also reduce mis-selling, which prevents a lot of frustration and increases service levels.
Control over processes
Successful spare parts management means having full control over inventory, real-time insight into parts and logistics processes at all times and being able to make adjustments immediately where necessary. No more articles of unknown origin, which are completely wrong in the books or of which the numbers mentioned in the system do not match reality. Knowing what is present in the various warehouses, where it is going and what the value is, saves a lot of time, a lot of cost and a lot of frustration.
Investing saves costs
Investments in improving spare parts management, such as investments in an ERP system or WMS, can pay for themselves at lightning speed. Do you encounter daily frustrations in managing inventory? But do you see opportunities for improvement? Then don't hesitate to take action. Clearly define the various processes and see where you can be more efficient and better. On the one hand by adapting the way of working, on the other hand by support with the right tools and specialized partners in spare parts management.
Peter Gerhardt is Senior Lead Consultant Logistics at Dysel and helps clients improve logistics processes for maximum results.
