Inventory Basics - Inventory Management ~ Supper Information

The Elements of a Pretty Good Inventory System

We like our Clearly Inventory software. We think it’s easy to use, and we know that it will help you become more productive. But no matter how good we think it is, it will fail to help you if you don’t do some very basic things.
The purpose of this section of the Inventory Basics Guide is to walk you through the absolute basic attributes of a pretty good inventory management system and to instruct you in detail about how to implement our recommendations.
We say “pretty good” because there are no perfect ways to create the elements of an inventory management system, but there are lots of bad ways. You may be able to improve on our recommendations or your enterprise may have to do things differently, but if you follow our recommendations, you’ll wind up with a pretty good system.

The Critical Elements of a Pretty Good Inventory System

Well-organized location names
Location labels that are easy to read and unambiguous
Unique, short, and unmistakable item numbers
Units of measure
A good starting count
Software that tracks all inventory activity
Good policies
Most important: people who know and follow good policies

Before we get into each of the above elements in more detail, let’s take a moment to explain why these elements are so important.

Well-Organized Location Names & Location Labels That Are Easy to Read and Unambiguous

If an item can be stored somewhere, that "somewhere" must have a name, and it should be labeled with that name. If it doesn’t, time will be wasted looking for things, people will stock things in the wrong place, locations will get referred to by more than one name, and your inventory will be in constant drift toward disorganization.
Remember, any open space can potentially store stuff, so label ALL of your storage locations, not just the ones that currently have stock. An open aisle? Name it, label it. An empty corner? Name it, label it. The tiny water heater closet? Name it, label it.
And don't pick just any name. You must have some logic to your location naming scheme. If you don't, you're setting yourself up for frustration down the road in ways that are difficult to anticipate. We’ll give you some advice on a naming scheme later in this guide, but no matter what you decide to call your locations, make sure they’re all labeled and all the names are unique.
Labels that are easy to read help everyone work faster. For example, if the letters on your labels are so small that you have to be two feet away to read them, or if the labels blend in with rack colors, etc., you'll be slowing down your operations and opening up yourself to mistakes.
Labels that don't clearly state which location they're referring to (i.e., labels with no arrows on shelves that have items above and below) will cause the same delays and errors as poorly printed labels.

Item Descriptions

All of your items should have well-defined unique descriptions, for many of the same reasons that apply to locations. Without good descriptions, people can become confused about whether or not they have stock on an item or what item needs to be ordered. It can also be hard to search for items in reports or find similar items when searching your inventory system. Our opinions about creating good descriptions for your items are a little more firm, and we’ll explain it in greater detail later.

Item Numbers

Item numbers also help uniquely identify items, but one of their greatest benefits is lost on people who haven’t used a software system to track their inventory: they serve as a shorthand, or abbreviated item description. When you are searching your inventory, making transactions, filling orders, filtering or searching reports, item numbers really come in handy. Instead of typing descriptions that can be hundreds of characters long and hard to distinguish at a glance, most companies can use item numbers of only five or six characters or numbers in length. It makes it easier to use your inventory software, and anything that makes something easier improves the chances that it will get done.

Units of Measure

Units of measure, things like “pcs”, “ea”, “lbs”, or “bags”, give meaning to quantities, and they belong in their own separate place, outside of descriptions and the numeric quantity fields. Using well-created and consistent units of measure will make stock levels, shipping quantities, and ordering quantities easier to understand.

A Good Starting Count

Loading data into a new inventory software program is an excellent time to get a good count of your stock levels. Once you have labeled your locations, cleaned up your descriptions, created item numbers, and used consistent units of measure, getting a good stock level count will be much easier, faster, and better organized.

A counting toy to illustrate the idea of performing inventory counts.

A Software System That Tracks All Inventory Activity

If you’re reading this, you probably realize that keeping your inventory data with pen and paper, or on a spreadsheet, just won’t cut it. Good inventory software will make it easier for you to to track your inventory, allow many users access to it, offer you insight into your inventory activity, and keep an accurate historical record of what’s happened.

Creating Policies and Training People About the Entire Inventory System

The people who work with your stock and use your inventory system are the most critical element in establishing a pretty good inventory management system. You must make sure that these people know what to do with items that are received, taken from stock, reserved for future use, and required for production. They should also know who is responsible for making certain transactions, etc. In some cases, this may be only one or two people, but there’s nothing wrong with writing down your policies and making sure they get followed. If you or the people you work with aren’t consistent about the way inventory is handled, it won’t matter what software you use; you will only experience frustration and failure.
Next: How to Name Your Inventory Locations

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Sunday, May 29, 2016