COVID-19 has wreaked havoc on businesses of all sizes. However, small businesses are the worst hit as cash flow is a major problem for them. And then, matters could become worse, if their working capital gets struck in managing deadstock inventory. This is where inventory management practices could come to their rescue. However, because of the current crises, the old rule of thumb on inventory management won’t work. It would help if you devised new rules in keeping with the pandemic. Yes, there’s always a way out.
Here we’ve put together five new inventory management rules that could help your business survive but thrive during and post-pandemic.
1. Stock pandemic-inspired products if possible
As it turns out, the COVID-19 pandemic has led to abrupt changes in customer behavior. Indeed, businesses are finding it hard to meet sudden changes in customer requirements.
For instance, the goods that were in high demand yesterday were no more in order today.
Today, customers demand more critical products and services such as medical supplies, toilet paper, canned food, home entertainment, audio, and headsets, among many essential things.
Notwithstanding the change in customer behavior, if the businesses intend to serve their customers better, they need a clear idea of the kind of goods they need to stock as against the products they stocked the previous day, much less the last season.
One sure-fire way of selling maximum goods is by stocking pandemic-inspired products. Some e-commerce retailers are witnessing a whopping 250% increase in demand for such products. This means, this area is rife with opportunity.
And if you focus on one of those areas where the coronavirus infected patients are high in numbers, then it goes without saying.
2. Crystal-clear picture on overstocked, understocked and stockout items
Another crucial thing to consider during this crisis is to know precisely the kind of goods that could be easily accessed both from the warehouse and the supply chains.
To that end, you need to know your inventory status accurately. Some companies may have the required inventory, but they could be located at multiple locations. You need to have precise information on how much of the necessary inventory you have and where you could find them.
For this, the businesses need to maintain an accurate record of inventory, in terms of what items are there in each of these warehouses. Whether the FIFO or LIFO method of inventory management is being used to maintain inventory? Or whether inventory is maintained periodically or perpetual basis, among many other things?
Organizations that are yet to streamline their inventory processes will find themselves struggling to meet customer demands. In fact, overstocking or understocking of inventory may happen. In fact, overstocking nonessentials could lead to an oversupply of goods that customers are least interested in buying. On the other hand, understocking could lead to situations where customers are demanding essential products, but you don’t have enough at hand to meet their requirements.
And if your supply chains are disrupted, it won’t be possible to order goods if you are understocked, which would affect your delivery. This could mean a severe loss in revenues. Leveraging inventory management software during these times could come handy to drive efficient management of inventory.
3. Order goods from suppliers with shortest lead time possible
You may have on the roaster of suppliers to pick and choose from for ordering inventory. And these suppliers would be readily offering you lower unit prices for higher minimum order (MOQ) quantities. But then, with coronavirus disrupting supply chains, you need to check their lead times as well. If these suppliers have longer lead times, it would be better to switch suppliers with shorter lead times. Why? It’s because it ensures stock availability all the time.
Orderhive, inventory management software could help you whittle down to the supplier who would fulfill the orders within the required time and your budget.
4. Combat inaccurate demand forecast with inventory software
With social distancing measures being practiced in several countries, it won’t be easy for forecasting tools to give out 100% accurate projections. To combat this, use inventory tools that come with built-in reports and alerts.
Inventory software will help you with accurate demand forecast in the following ways:
- Track demand during the forecast period and send alerts when it’s differing significantly from the forecast. The signals will allow you to probe the cause and keep track of items as we advance.
- Anomalies in the forecast period are compared to actual demand. This will help you to make the required adjustments in the upcoming forecast.
- Generate daily reports on runout stock, which would help you to frame a plan of action.
5. Expand your supply chain network to include ASEAN regions
Long supply chains are inevitably risky. Why? It’s because if any part of the supply chain is compromised, the whole chain gets affected.
The current pandemic situation has awakened the world toward the potential risks of associating with a single supply chain resource of China-based manufacturing. In the wake of disruptions and increasing competition, manufacturers are putting in their best efforts to diversify their supply chains within the Association of Southeast Asian Nations (ASEAN). ASEAN nations include Malaysia, India, Indonesia, Thailand, and Vietnam. The diversified supply chain helps manufacturers with reduced tariffs and workforce expansion, but it also helps gain financial and operational benefits.
Businesses, globally, are facing the heat of this pandemic. The only way to meet this grim situation is to learn from each other and map out strategies that’ll keep your businesses up and running despite the negativity. Inventory management