Extra Edition / Technical

Six Tips to Avoid Inventory Nightmares

Make Sure Your Inventory Matches Your Needs

February 3, 2014
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Brian Sutter
Brian Sutter

Wake up in a cold sweat at the thought of inefficient inventory counting? Does the thought of lost source code scare you more than anything else that goes bump in the night? The art of logistics is challenging, but when mistakes are made, don’t let the scare be something that was preventable. The boogey-man has nothing on these inventory nightmares.

1. Outdated Systems

If you’ve been in business long enough, you face the problem of legacy computer systems, procedures, and equipment that are no longer up to the task. Unless your business is tiny, it’s hard to justify paper-based systems and manual counting. These are notoriously slow, inefficient, and prone to error. You might be using an old computer application that hasn’t been updated. We’ve heard of cases where businesses have lost the source code to their ancient systems, making changes and fixes impossible. If you are struggling with creaky software and decrepit barcode readers, figure out how much time and money you’re losing because of counting and recording mistakes. Chances are you’ll save a bundle by replacing the whole system with modern inventory management and tracking solutions.

2. Obsolescence

Barcode scanning
A modern perpetual inventory system can prevent inventory nightmares.

Optimal ordering can prevent every logistics specialist’s worst fear: too much of a bad thing. Inefficient inventory accounting can cause any business to overstock. Sure, losing sales due to stockouts sounds gruesome, but a warehouse full of outdated products is much worse. Imagine having too many replacements parts for an HVAC system and then realizing half of the parts and equipment are out of date and can’t be used. That means the investment made to purchase those items with the hopes of using them during a service call has become moot, as well as very costly.

A proactive move to combat both of these stocking dilemmas is a modern perpetual inventory system. These systems provide timely information on inventory levels and even reorder products automatically at the optimal time.

3. Failure to Return

If you have inventory items that aren’t selling or are defective, you may be able to return them to the vendor, who must authorize the return and will no-doubt charge a restocking fee. For this scheme to work, you must first be aware that your inventory is building up or moving slowly. A perpetual inventory system with real-time inventory tracking will provide this information and may even handle some of the return processing. A manual periodic inventory system with infrequent counts causes you to miss the deadlines vendors set for authorized returns.

4. Victim of the Fickle Public

Mastering the art of logistics requires attention to detail, efficiency, and a little luck. But when your luck goes bad, and a product you thought would be a hit turns out to be a miss, you’re left with losses through markdowns. Even if your focus is on HVAC service, you need to purchase parts so you’re prepared for every service call. Trying to meet the needs of your customers means you must stock as many parts as are required by each system — and that can get pretty expensive.

It’s tough to know when the public will adore one model and scorn another, but a way to prevent this nightmarish situation is to have an up-to-date inventory procedure. Mismanagement caused by tracking inventory inefficiently will build up high stock levels, even on the products that the public isn’t scooping up. If your current inventory procedures and systems aren’t giving you this kind of information, it is time to update.

5. Supplier Activity

We’ve all seen the scary movies where the least suspected character turns out to be the problem all along. You depend on your suppliers for the inventory you need, but you also should be able to easily know if you are receiving everything you ordered.

Suppliers who cut corners are frightening, but not totally uncommon. Even if you trust your suppliers, it is important to have equipment that will make sure you are getting the correct shipments you need. A modern inventory system at the receiving dock will verify your trust and allow you to sleep easy.

6. Light Invoices

An appliance repair company found itself with a significant shrinkage problem. They figured out that field technicians weren’t accurate when invoicing the materials, parts, and supplies they used to make repairs. In other words, they were giving away the merchandise. They were busy and didn’t have the time to write everything down. A barcode reader or RF gun in every truck would have stopped the problem. If you have busy employees who don’t have time for a lot of paperwork, make it easier on them. You’ll also save money by automating field procedures featuring wireless tracking of goods and materials as they are used and by on-the-spot printing of field-generated invoices.

HVAC and mechanical contractors usually have a lot of balls in the air at once, but being proactive can prevent even the scariest of disasters. Making sure your equipment is up-to-date, managing inventory and supplies is a little more time consuming than checking under the bed for monsters but it can prevent huge issues in the future.

Publication date: 2/3/2014

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