4 Ways Bad Inventory Control Costing Your Business
Profitable manufacturing is a constant juggling act, where one dropped ball can cost you time, money, and most importantly, your reputation. Any good manufacturer knows that the one of the most critical balls, is your inventory control – drop that one and your challenges can quickly become existential.
Regardless of whether your end product has ten components or a thousand, ensuring you have the right materials on hand when you need them is the easiest way to improve your manufacturing business margins and profitability.
There are a host of problems created by poor inventory control, including;
- Higher Holding Costs. The longer you hold your inventory, the higher your costs. Having material sit in your warehouse for weeks, months (or years!) can have a serious impact on your cash flow and increase wastage as items become redundant. There are also a range of hidden costs including storage, insurance and potential loss/theft
- Missed Sales. While holding too much stock carries risk, having too little stock will lose you sales. The timely delivery of your products to customers can be the difference between winning and losing a sale. Having stock sitting around waiting for components also takes up storage space.
- Uncertain Cash Flow. This is what it all comes down to: good inventory management gets you closer to optimum inventory levels to free up cash in the short term to meet other expenses and short-term debt obligations. Plus, if you are replenishing inventory in close parallel to selling it, you are bringing in cash at a similar rate to what you pay out in for inventory.
- Too Much Real Estate. Think you need a bigger shed? You probably just need better inventory management. Carrying the right amount of inventory reduces the need to own or lease excess space. Good inventory management will reduce the need for additional space, putting the savings directly to the bottom line.
While Inventory Control is Complex, The Solution is Simple
The solution to poor inventory control and all the problems it can cause is simple – great data, and good systems.
Ditching your excel spreadsheet (it is riddled with errors) and getting better insights into your current inventory usage and designing an effective inventory plan is the only way to overcome the issues of bad inventory control.
As your all-in-one manufacturing solution, WorkGuru’s powerful business management solution puts the power of data into your decision making and takes the hassle out of managing your inventory.
WorkGuru’s web kiosk allows all you staff to enter their timesheets and material usage straight onto whatever project they’re working on, meaning no more double-entry, AND real-time reporting on staff productivity and inventory requirements. While real-time doesn’t sound particularly important if you’re not used to it, the difference between getting stock usage entered into the system as it’s done, and on Friday’s before everyone goes home for the week, can mean the difference between having the materials to keep working on Monday morning, or being stuck waiting for a delivery to arrive.
With WorkGuru you can build your manufacturing project templates to account for not only your bill of materials, but the time that you expect to use when building a product. Whether it’s the parts on a caravan, trailer, shed, or boat, WorkGuru has you covered.
Your inventory plan should include a reliable inventory management system, generating and monitoring stock levels and adopting automated inventory ordering and supply chain processes.
When you’ve finished making a product for a client, you need to be able to track it’s warranty details, who the original client was, and what other work you’ve done on it. WorkGuru lets you track every timesheet, stock item and piece of work ever done on that asset in a single place, well into the future.