Inventory Management: An Integrated, Disciplined Process ...
We all recognize that inventory usually is one of our largest assets. Yet many of us don’t give it the importance or priority it deserves.
Inventory management impacts almost every area of the company and can help contribute substantial hidden profits or losses depending on how it’s managed. The effect of poor inventory management often is hidden when business is good, and although quite evident when business is bad, businesses don’t have the resources at that point to address the issues.
Unfortunately, this cycle is repeated far too often. Establishing a sound inventory management process within the ongoing company culture will cushion the negative impacts when business is soft.
Effective inventory management is an integrated and disciplined process that must be part of a company’s culture. Although most companies have some planning processes in place, inventory management isn’t formalized or closely controlled to achieve maximum results. In addition, to be successful it must be embraced and followed by all levels of management.
Middle of the Wheel
To get an idea of inventory management’s impact, picture a bicycle wheel. All of the spokes at some point intersect in the middle hub; consider inventory management as that hub. To have the most efficient impact on the business, inventory management must interact with every other department in the company.
As the owner or president of a company, you ideally want constant communication between all departments. Unfortunately most companies, regardless of size, seem to naturally create “silos” and thus limit open cross-departmental communication. Inventory management is one of the few departments in a catalog company that, to do its job effectively, must regularly communicate with all other departments.
Consider how your inventory management department should interact with other departments:
1. Marketing: Regardless of product lead times, for most catalogers the planning cycle should begin approximately 10 to 12 months earlier than the catalog drop. This includes initial circulation and demand plans developed by marketing. Inventory management works with marketing throughout the cycle, creating a checks and balances system and reinforcing the top line plan.