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Poor inventory management compromises the success of businesses due to a loss of viable product and therefore, profit. The 2016 National Security Survey revealed inventory loss costs businesses over $40 billion. Some of this inventory loss can be prevented. This makes good inventory management essential to any successful business. Follow these five tips to reduce loss with better inventory management.
Increase employee security
Unfortunately, theft is a big cause of inventory loss. Screen your employees before hiring. Outline the consequences for employee theft during the induction.
To increase security within the workplace, cameras are the best way to capture suspicious activity. They have the added option to review the footage later. A cheaper alternative includes mirrors. Place mirrors in blind spots such as corners and alleyways to keep an eye out for suspicious activity.
Some businesses also opt for faux cameras as a cheaper alternative to working security cameras. Signage of increased security may also prevent employees from succumbing to the temptation of theft.
Automatic processes will reduce human error, another common cause for inventory shrinkage. Inventory management software is now readily available.
In this day and age, technology’s widespread use is heavily relied upon. It’s important your online inventory tracking systems are secure. Automated systems may reduce the risk of human error, but they open up cyber security risks.
Common risks include compromised data, hacking attacks, and losing access to your inventory. Utilise systems with increased cybersecurity. This includes two-factor authentication, restricted access and regular software updates. Train your employees to identify phishing attacks.
Give products unique identifiers
If each product can be uniquely-identified, it can be more easily tracked.
SKU codes or stock-keeping units are not to be confused with UPC codes. Whereas a UPC code is standardised, SKU codes are assigned by the company using alphanumeric code. Creating a code unique to your business will aid in tracking inventory. SKU codes can be generated manually. Otherwise, free SKU generators are available.
RFID, or radio frequency identification, includes chips embedded in product tags. RFID has advantages over barcode use in speed, function and accuracy.
The biggest advantage is that multiple RFID tags can be scanned at once over a near-field range. This will save a lot of time in the long run, especially during a stocktake. Products stored in a cupboard or pallet could all be scanned at once. This eliminates the need for unpacking and human error.
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Reduce stock damage
An overlooked reason for inventory loss includes damage to stock. For perishables, reduce the amount of stock ordered and instead organise for more frequent deliveries. Not only will this open up more space in your warehouse, but you will also prevent waste from spoiled products.
Ensure fragile items are adequately stored both in their individual packaging and at your business. Store fragile products low to prevent breakage from transportation.
For processes done by hand, always double-check. This is the easiest way to prevent inaccuracies caused due to human error.
Assign multiple employees to carry out the stocktake. Any areas with discrepancies can be easily identified and recounted. Record the shipments both when they enter and when they exit the business. Update these numbers regularly to prevent inaccuracies.
Have a manager sign off invoicing or other important documentation. This will prevent a problem migrating outside of the company. Double-checking is a great way to identify which stage of inventory management the problems are occurring.
Inventory shrinkage is often overlooked and can take its toll on business success. Employee theft, human error and stock damage are three large causes of inventory loss. Focus on the prevention of these issues before they occur.
Creative writer Johanna Cider hails from Wellington, New Zealand. Her work has been published on various blogs and local Kiwi sites. To learn more about Johanna and her work, follow her on Tumblr.