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6 Things Great Inventory Managers Do
Inventory managers play a crucial role in any business. To do it successfully they need to possess a wide range of skills. Inventory managers lead a team of workers as they manage the flow of stock in and out of a business. Their responsibilities range from HR to logistics, from dealing with individual employees to monitoring the movement of thousands of items. If an inventory manager is doing their job well it can lead to great growth opportunities for a business. If they aren’t it can be an anchor weight dragging your organization down.
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Keeping inventory stocked is critical to any company’s long term success. Customers who can’t buy what they want in a store or online will go to a different store. It is that simple. If you don’t have it, you can’t sell it. It is also important to be able to connect inventory to sales because if you sell it and don’t have it you find yourself in even more trouble,
as Best Buy learned in Christmas of 2011. The failure cost them their reputation and lost money and customers.
Sometimes the problem isn’t having the stock, it’s making sure your inventory is where it needs to be, namely on shelves. Wal-mart started losing customers because it couldn’t manage its inventory effectively
according to Bloomberg. The company is one of the most organized logistical machines in the world, but it comes down to effective inventory management at individual stores for the machine to truly run smoothly.
For your business,
effective inventory management can easily mean the difference between success and failure. Your inventory manager is in charge of that and can be compensated well for it too, with a median salary of almost $80,000. It’s an important piece of the profitability puzzle.
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Below are 6 things great inventory managers do and those hiring inventory managers should be looking for.
1. Be a leader and a team player
Inventory managers need to be effective leaders. They hire and fire and manage a team of employees, and all the challenges that entails. They need to lead their team. They also need to be able to take direction and work as part of a bigger team. Most inventory managers will need to work with marketing and sales departments as well as purchasing managers to organize the efficient flow of inventory in and out of the company.
2. Know your products
Inventory managers need to understand what they are managing. They don’t necessarily need to come with the knowledge in hand, but it certainly helps. However, a good inventory manager will always try to understand the kind of products they sell and what is involved in making them. They also should follow industry news so they can spot trends in supply and demand that might impact inventory scheduling.
Beyond this industry specific knowledge, inventory managers need to understand the critical difference between types of inventory and what it means for keeping inventory in stock. There are
four types of inventory:
- Item - an individual item that you put on the shelf and sell
- Assembly - a group of items needed to assemble another item
- Family - groups of similar items
- Case Pack - bulk package of multiple items.
This can play a big role in how you approach inventory and how you track inventory. Paul Huffaker, vice-president of Racesource Inc. a custom manufacturer of vehicle components for the racing industry and part of the race team for monster trucks Grave Digger and El Toro Loco explains how this impacts his business. “Maintaining an accurate inventory count on Excel was time consuming and error ridden,” said Huffaker. “Often I would reorder or manufacture parts I already had simply because I didn’t know I had them, which was an unnecessary cost. With many smaller items being combined into an assembly, I needed a system that could use the existing UPC codes to track the individual item as well as the assembly.”
3. Know how to evaluate suppliers and build relationships
Inventory managers are often involved in ordering products and always involved in making sure the product a company gets is the product they want. This means you need to know who your suppliers are and build strong relationships with them. Having good relationships with your suppliers is just good practice, but it will also make it easier for you to visit their facility if needed or maintain communication about
inventory needs and anything that might impact those needs.
4. Uses the latest technology to track inventmory AND assets
The earliest forms of inventory tracking relied on a person counting boxes coming off a cart and recording the information. For many years for many companies pen and paper based systems worked. They are time consuming. Excel and spreadsheets are a step up, but just a small one, and using Excel can cause big problems. Barcode systems and technology are the latest set of tools for tracking inventory and assets and it is crucial to use them.
5. Is able to forecast inventory needs
One of the most important tasks of an inventory manager is
tracking inventory flow to be able to predict future needs. Forecasting is the name of the game. Good inventory managers use tracking software to understand the ever changing ebb and flow of product demand. They also keep track of marketing promotions and calendar events (like Holiday shopping) to make sure they have extra inventory on hand.
The 80/20 rule (80% of demand comes from 20% of the customer base) is usually applied to customers and sales,
but the same forula can also be used to figure out inventory demand. The percentages may not be exact, but the idea is to understand which inventory is driving demand. By doing so you can understand your ordering needs and schedule better.
6. Sees the big picture when analyzing inventory costs
Inventory management and the related costs aren’t actually just about tracking inventory. It isn’t just how much inventory you have on hand. It is also important to consider your ability to store, move, and sell inventory. You can’t move inventory if you don’t have somewhere to keep it and people (and often machines) to move it. Managing those aspects of the operation is essential to reducing friction along your supply chain.
Tracking assets like storage spaces, tools and equipment involved in inventory transport, and employee capacity will enable even greater refinements of your inventory schedule and needs. Asset management technology can help inventory managers track equipment and make sure resources are used efficiently.
Also, assets don’t gain value with age, but they continue to take up the same limited company resources. Don’t let old assets rot your shelves, use mark downs and promotions to get rid of them, and if that doesn’t work, write them off as losses or turn them into donations.
Great inventory managers need to have a general understanding of almost every aspect of a business so they can do their job effectively. To be great at their jobs, inventory managers need to know inventory management and follow these best practices.
How could an inventory management system help your inventory manager to be successful?
