Every business has some level of inventory sitting in a warehouse, closet, racking system, or cabinets around the work place on mobile equipment. This inventory is controlled using all sorts of managing techniques from the manual processes of simply counting to the automated process using some computer based system. The size of the company typically determines the extent of managing inventory as well as the affordability of the system put in place. The amount of inventory will determine the amount of potential time required to adequately manage your inventory, and the system will determine the complexity of the process. Over all, inventory is the one key area which will always have a high level of room for improvement both on the managing side as well as to the level of what is carried. Inventory left sitting idle over any length of time is basically waste and is eating up productivity dollars. Any inventory not being tracked properly is simply lost of product and potentially unbilled to the customer. Getting a handle on your inventory will yield productivity improvements in a very short amount of time.
The first step in managing any level of inventory is to know exactly what is in inventory at all times. To do this, two key things need to be in place; first and foremost, every item SKU must be defined to what exactly what it is. Secondly, every defined SKU must have some reoccurring location for storage. Identification can be fairly easy to manage by simply recording what the item description is, the characteristic’s, the manufacturer that makes it, and the manufacturer’s number. The description must make sense to anyone looking for the material. It typically ends up being a merge between what the supplier calls the item and what the typical end user will call the item. Also, typically, it is formatted in a Noun, Modifier, Modifier fashion which facilitates consistency across multiple objects of similar applications. Next, along with the description, there should include some characteristics to assist in identifying the item such as sizing, usage, volumes, etc. The type and use of the material will dictate the type and format of the characteristic’s. The key for characteristic’s and description’s are creating and organizing them so when an end user performs a search, they can search using common and relatable terms for the item type and/or industry. The manufacturer and manufacturer numbers are different than the supplier and supplier numbers. Depending on the size and complexity of the item being stored, either may be work OK, but both are preferred.
Storage is equally important. If you have stuff simply shoved in a cabinet or on shelving in no particular order or fashion, chances are you have excess amounts of inventory or you simply don’t know what you have. Everything should have a location specified for that particular item…always and consistently. The manner in which the location should be identified should fall in a format which facilitates intuitive finding and tracking and not require a higher level of education or years of service before it is learned or understood. When developing locational codes, for every change in direction (Up, down, back, front, left, right, etc.) there should also be a change in code type from letter to number. Sequential coding should be structured such that any potential storage expansion allows adding the next sequential code pertaining to that particular level. Once this is completed properly, the method of tracking becomes very easy. A simple Excel file can be established linking the item details to the location details. Tracking and inventory management can then be performed consistently, easily, and somewhat automatically. For service type organization’s, using trucks and such, this method facilitates all trucks having the same organizational order for carried inventory thus making tracking and usage between personnel intuitive and not guess work.
A few simple steps allows for more exact inventory and better tracking. If your inventory gets billed to the customer upon usage, knowing exactly what inventory was used will provide more accuracy and clarity to both, project requirement’s and cost of goods sold information. Once the ground work is established and everything is documented, the hard part becomes the change management of end users dealing with the way things used to be verses the new way of managing. This change should be fairly easy and evolve fairly quickly. It may also require some tweaking as time goes on due to learning about constraints and obstacles related to managing the inventory. Over a relatively short period of time, when moving from a chaotic state of identifying and managing inventory levels to controlling what and where your inventory is located and going, you will see increases in total productivity, increases in organization and cleanliness, and an overall sense of exactly what you have and don’t have. Many organization’s fail at this level of management primarily due to lack of understanding towards how easy it is to establish good inventory practices. In some cases, I have seen high levels of theft become uncovered simply due to the implementation of inventory control. It isn’t hard. It just requires due diligence up front to be successful throughout.
O.M.E.M., LLC – Helping Businesses Improve