No one knew more about the challenges of growing a business than Paul Huffaker, vice president of Racesource Inc., a company that modifies vehicle components for the racing industry, particularly the Grave Digger and El Toro Loco monster truck teams.
Just as Grave Digger and El Toro Loco are known in the monster truck racing industry, Racesource is known for high quality vehicle parts and components. As Racesource grew, so did its inventory problems. The company's inventory has outgrown the inventory tracking system - an Excel spreadsheet. And Huffaker quickly learned that their lineups couldn't be tracked on a spreadsheet. Each assembly consisted of multiple items that could be used individually or combined to create a single item or asset.
That's when he decided it was time for a change. “Maintaining accurate inventory counts in Excel was time-consuming and error-prone,” Huffaker said. “I was often re-ordering or making parts I already had because I didn't know I had them, which was an unnecessary expense. And since many smaller items were combined into an assembly, I needed a system that could use existing UPC codes to track both the individual item and the assembly.”
And unfortunately, these bad business habits will eventually trickle down to your customers. Implementing a barcode inventory management system can help you get back on track and significantly ease the pain of a fast-growing business. Growth is good, especially with the guidance of accurate real-time data that you will collect.
You can dive deeper into these techniques to optimize your inventory and re-manage it.
1. First In First Out (FIFO):
This principle is simple, but absolutely necessary, especially in the case of perishable goods. As a retailer, it is not wise to always use up-to-date inventory to fulfill orders. When old inventory sits on warehouse shelves, it is subject to damage, spoilage, and expiration. Why not make it a rule to store new inventory at the back of the shelf and then remove it from the front? This automatically forces a FIFO system. Year-end counts can also be done faster with FIFO, as FIFOs are a great way to calculate inventory amounts.
2. ABC analysis
Inventory prioritization and warehouse organization can be said to be "as easy as ABC" if all inventory items are divided into three groups A, B and C.
A items: high value / seldom sold.
B Items: Average Value/Average Sales Frequency.
C items: low value, high sales frequency.
One thing to keep in mind with this system is that you will likely have a relatively small number of "A" items in your inventory, and miscounting your inventory can cause big problems. These items require more attention than the "C" items. To implement this system in your warehouse, store the "C" items near the packing area because they are the most popular and move back to the "A" items.
3. Labeling the optimal position
A cluttered and untidy warehouse can keep you up at night and turn your work environment into a total nightmare. Teams should be able to browse the system and easily find products when needed. And when the "ABC" system is in operation, it is essential to label each area or unit of shelving. Do not use fancy names and do not complicate things unnecessarily. In this case, keep it simple. This makes it easier for current employees to learn first and then train new hires.
4. Stock Review
Even with the best inventory management practices, errors are bound to happen. So do whatever you can to minimize mistakes and make inventory checks less of a hassle for you and everyone involved. For example, don't do big year-end counts. Instead, spread the number around the world.
Cycle Count Each week, assign team members to count a few items. Each product must be counted and verified several times during a year.
Local review. There is no need for spot checks on a regular schedule. If for some reason there is a problem with a particular product, or if team members are busy and looking for work to do, a thorough review may be necessary. Spot checks only make the job more accurate
Each of these inventory methods brings new effectiveness and efficiency to the entire warehouse. However, adding an inventory management system makes any task less intimidating and easier. When teams can use barcode scanners and smartphone apps to count inventory, variances are reduced and productivity is increased.
Paul Huffaker of Racesource can guarantee instant results after just one day of use. Our inventory management system not only clearly labeled all of our inventory and improved our billing, manufacturing and reordering processes, it saved us $8,000 in unnecessary costs and increased our team's efficiency by 52 hours per year.
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