{"id":3359,"date":"2020-08-13T18:03:29","date_gmt":"2020-08-13T18:03:29","guid":{"rendered":"http:\/\/www.rtgsolutionsgroup.com\/?p=3359"},"modified":"2020-08-13T18:03:29","modified_gmt":"2020-08-13T18:03:29","slug":"how-better-inventory-management-leads-to-increase-in-profitability","status":"publish","type":"post","link":"https:\/\/www.rtgsolutionsgroup.com\/how-better-inventory-management-leads-to-increase-in-profitability\/","title":{"rendered":"How Better Inventory Management Leads to Increase in Profitability"},"content":{"rendered":"
[vc_row][vc_column width=”3\/4″][vc_single_image image=”3362″ img_size=”1110×500″][vc_column_text]Have you ever accidentally sold an item that was out of stock? Fulfilled an order late because you didn\u2019t have raw materials in stock? Lost valuable warehouse space to overstock? Had to pause sales due to a slow re-stock?\u00a0<\/span><\/p>\n

If you have, you probably learned that today\u2019s fast-paced economy has no time for inventory blunders. And too many inventory management mistakes can seriously damage your bottom line.<\/span><\/p>\n

In fact, worldwide, inventory management inefficiencies\u2013or <\/span>inventory distortions<\/span><\/a>\u2013are responsible for $1.1 trillion in losses every year!<\/span><\/p>\n

Improving inventory management can take your business (and profits) to the next level.\u00a0<\/span><\/p>\n

At RTG Solutions Group, we\u2019ve boiled inventory management and <\/span>process improvement<\/span><\/a> down to a science. We believe that proven strategies solve corporate problems and maximize profitability.\u00a0<\/span><\/p>\n

That\u2019s why, in this article, we share our tried-and-tested methods to improve inventory management and increase profitability.\u00a0<\/span><\/p>\n

Here\u2019s what we cover in our inventory management guide:<\/span><\/p>\n

    \n
  1. \n
      \n
    1. Maximize Use of Enterprise Resource Planning (ERP)<\/span><\/strong><\/li>\n
    2. Integrate your Systems<\/span><\/strong><\/li>\n
    3. Optimize Use of Space<\/span><\/strong><\/li>\n
    4. Use Just-In-Time Inventory Management<\/span><\/strong><\/li>\n
    5. Implement Item Tagging\u00a0\u00a0<\/span><\/strong><\/li>\n<\/ol>\n<\/li>\n<\/ol>\n[\/vc_column_text][vc_custom_heading text=”WHAT IS INVENTORY MANAGEMENT?” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_single_image image=”3363″ img_size=”1110×500″][vc_column_text]Inventory management refers to how you source, categorize, store, transport, re-stock, and sell your business\u2019 inputs and outputs.\u00a0<\/span><\/p>\n

      How you handle inventory from the moment it\u2019s sourced up to the moment it\u2019s delivered to your consumer is how you manage your inventory.\u00a0<\/span><\/p>\n

      As a vital component of business operations, proper inventory management is key to efficiency, customer satisfaction, and overall success.\u00a0<\/span><\/p>\n

      And yet, many organizations do not take a productive or systematic approach to inventory management. One <\/span>supply chain analysis<\/span><\/a> reports that 46% of small businesses don\u2019t even track their inventory or use an automated inventory tracking system!\u00a0<\/span><\/p>\n

      Is your company in need of an inventory management revamp? Keep reading to learn how to enhance your inventory management system and boost profits!<\/span>[\/vc_column_text][vc_custom_heading text=”MAXIMIZE USE OF ENTERPRISE RESOURCE PLANNING (ERP) SOFTWARE” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_single_image image=”3361″ img_size=”1110×500″][vc_column_text]Enterprise Resource Planning is a fantastic kind of software designed specifically to track and manage inventory. Modern ERPs, however, can do just about anything, from processing payments to re-ordering inventory.\u00a0<\/span><\/p>\n

      We wrote about the importance of ERPs in a previous article. <\/span>Reeling from Supply Chain Disruptions? Here\u2019s How to Fix it.<\/b><\/a>\u00a0<\/b><\/p>\n

      Most companies invest in ERP systems to some extent. However, most organizations don\u2019t maximize \u2013 or even know \u2013 their potential.\u00a0<\/span><\/p>\n

      To take full advantage of all that an ERP system can offer, you must first assess how your organization uses its ERP. Do you have one? If so, what do you use it for? If not, how do you track and manage inventory? Do all employees know their role in the ERP system? Have all employees been trained on how to use the system?\u00a0<\/span><\/p>\n

      The second step is to figure out the ERP\u2019s functions and how they could benefit your inventory processes. This will likely involve some research and training with the ERP provider.\u00a0<\/span><\/p>\n

      Finally, you will want to set up an implementation plan \u2013 complete with a training schedule \u2013 to introduce the ERP system.\u00a0<\/span>[\/vc_column_text][vc_custom_heading text=”INTEGRATE YOUR SYSTEMS” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_column_text]System integration is always good for efficiency. But it\u2019s especially beneficial for inventory management.\u00a0<\/span><\/p>\n

      Because there are so many moving parts involved in inventory operations, systems that don\u2019t work in synchronicity can be a productivity killer.\u00a0<\/span><\/p>\n

      Unsynchronized systems can cause data inconsistencies, poor communication, and other problems.\u00a0<\/span><\/p>\n

      But the flip side is that an investment in system integration can transform your inventory process.<\/span><\/p>\n

      A <\/span>2020 Market Share Analysis<\/span><\/a> found that companies can increase productivity by 25% and improve stock use efficiency by 30% if they switch to integrated inventory systems.<\/span>[\/vc_column_text][vc_custom_heading text=”OPTIMIZE YOUR USE OF SPACE” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_column_text]To promote efficiency in your inventory management system, start with the bones of your operation: your warehouse or facility. Physically map out the floor plan of your storage space or warehouse.\u00a0<\/span><\/p>\n

      Then, illustrate on the map where things are stored and how different processes are carried out.\u00a0<\/span><\/p>\n

      This will give you a physical visualization of your procedures. And this visual will highlight areas where the layout causes bottlenecks, delays, safety risks, and other inefficiencies.\u00a0<\/span><\/p>\n

      The impact that your floor plan has on overall efficiency cannot be overstated. Don\u2019t forget to re-assess your layout as inventory changes are made!\u00a0<\/span>[\/vc_column_text][vc_custom_heading text=”USE JUST-IN-TIME INVENTORY MANAGEMENT” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_single_image image=”3364″ img_size=”1110×500″][vc_column_text]The Just-in-time (JIT) management is an inventory and production method designed to increase productivity and decrease waste.\u00a0<\/span><\/p>\n

      The primary rule of JIT management is to maintain minimal inventory\u2013that is, receive inventory only as needed, rather than maintaining an excess stock.\u00a0<\/span><\/p>\n

      This reduces the risk of idle stock, cuts storage costs, and opens up warehouse space among other benefits!\u00a0<\/span><\/p>\n

      Of course, the JIT system is quite complex and relies on impeccable <\/span>supply chain<\/b><\/a> arrangements. After all, if your business only orders materials as needed, you need to trust that your supplier will always deliver quickly.\u00a0<\/span><\/p>\n

      For this reason, implementation of JIT production requires extensive planning, and it may not be the best fit for every business.\u00a0<\/span><\/p>\n

      However, for organizations that want to increase productivity and minimize storage costs, JIT management is a sure-fire way to improve profit margins.\u00a0<\/span>[\/vc_column_text][vc_custom_heading text=”IMPLEMENT ITEM TAGGING” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_column_text]Inventory visibility is vital to inventory management. Inventory visibility refers to how well you know your inventory quantities and their place in the supply chain. In other words, do you know how much inventory you have, where you get it from, and where it\u2019s stored?\u00a0<\/span><\/p>\n

      These questions are important because you cannot optimally manage your inventory if you do not know how much of it you have.\u00a0<\/span><\/p>\n

      Consequences of poor inventory visibility include overstocking and understocking, both of which are harmful to profitability.\u00a0<\/span><\/p>\n

      An effective strategy to improve visibility is to tag inventory with RFID tags that are scanned throughout the production process.<\/span><\/p>\n

      Scannable item tags can expedite your inventory processes and improve your inventory data quality. This is especially true when your tag system is integrated with your inventory management systems.<\/span><\/p>\n

      Just how helpful are item tags? Well, it’s estimated that item-level tagging can increase inventory accuracy from 63 percent to 95 percent. (source<\/a>)<\/p>\n

      Increased accuracy means better visibility, which means fewer stock-outs and overstocks, better data, and ultimately, higher profit margins.\u00a0<\/span>[\/vc_column_text][vc_custom_heading text=”INVENTORY MANAGEMENT CASE STUDY” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_column_text]In one case study, the RTG Solutions Group team tackled an inventory management problem for an organization with a sub-par inventory accuracy of 82%.\u00a0 Check out the problem and solutions at: <\/span>Improved Supply Chain Processes Increase Inventory Accuracy.<\/span><\/a>[\/vc_column_text][vc_custom_heading text=”CONCLUSION” font_container=”tag:h3|text_align:left” use_theme_fonts=”yes”][vc_column_text]Allocating resources towards improved inventory management is a smart investment that will yield tangible benefits to your bottom line.\u00a0<\/span><\/p>\n

      With so many sides to inventory management, you may not know where to start. With this expert guide, your company will be on its way to a new and improved system in no time!\u00a0<\/span><\/p>\n

      Need help with inventory management? At RTG Solutions Group, our supply chain experts partner with businesses to boost inventory efficiency and deliver the ROI. <\/span>Contact us<\/span><\/a> today to learn more! <\/span>[\/vc_column_text][vc_empty_space][\/vc_column][vc_column width=”1\/4″][stm_sidebar sidebar=”311″][\/vc_column][\/vc_row][vc_row full_width=”stretch_row” el_class=”third_bg_color” css=”.vc_custom_1566094721980{margin-bottom: -60px !important;background-color: #308c36 !important;}”][vc_column][vc_cta h2=”Experiencing disruption in your supply chain? We can help.” h2_font_container=”font_size:20px|color:%23ffffff|line_height:24px” h2_use_theme_fonts=”yes” shape=”square” style=”custom” add_button=”right” btn_title=”Call Us Today!” btn_style=”outline” btn_color=”white” btn_align=”right” btn_i_align=”right” btn_i_icon_fontawesome=”stm-phone6″ use_custom_fonts_h2=”true” btn_button_block=”true” btn_add_icon=”true” el_class=”third_bg_color” css=”.vc_custom_1597168468548{margin-bottom: 0px !important;}” custom_background=”#308c36″ custom_text=”#ffffff” btn_link=”url:https%3A%2F%2Fwww.rtgsolutionsgroup.com%2Fcontact-us%2F|title:Contact%20Us|target:%20_blank|”][\/vc_cta][\/vc_column][\/vc_row]\n<\/section>","protected":false},"excerpt":{"rendered":"

      [vc_row][vc_column width=”3\/4″][vc_single_image image=”3362″ img_size=”1110×500″][vc_column_text]Have you ever accidentally sold an item that was out of stock? Fulfilled an order late because you didn\u2019t have raw materials in stock? Lost valuable warehouse space to overstock? Had to pause sales due to a slow re-stock?\u00a0 If you have, you probably learned that today\u2019s fast-paced economy has no time<\/p>\n","protected":false},"author":1,"featured_media":3362,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[106],"tags":[],"yoast_head":"\nHow Better Inventory Management Leads to Increase in Profitability<\/title>\n<meta name=\"description\" content=\"Managing your inventory can be complex. Mistakes can damage the bottom line. 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