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The synergy of operations around the production chain can be a constant challenge for all parties involved.
This is primarily because the number of processes, data, and other variables involved in operations is vast, leading to a high degree of complexity in their execution.
Understanding this, regardless of the agents involved in operations, efficient inventory management can make the difference between optimized procedures and financial losses for agents and their channels.
When inventory management is done appropriately and effectively, it offers a range of benefits. These benefits include smoother processes within the production chain and increased sales and returns.
When it comes to industries, it's safe to say that inventory management plays an essential role. Industries are responsible for various types of inventory that can vary depending on the stage of the production cycle in which a particular product is located.
To learn more about inventory management and the practices that can transform industrial operations and their channels, continue reading below and discover how.
The complexity of inventory management
Common to a large part of agents in a production chain, product inventories are integral to the operations of industries, distribution channels, and retailers.
However, over time and with the advent of new technologies, inventory management processes have become more precise and automated.
Yet, in today's context, many of the problems that can disrupt inventory management still persist, leading to various negative consequences for industries and their partners.
Some of these problems include excessive volumes (overstock), product shortages (stockouts), and low-turnover products unnecessarily occupying space in inventories.
Moreover, one must consider the multitude of agents and processes typically involved in an industrial production chain.
Beyond quality internal planning and management, each agent must manage their operations with consideration for others involved in the chain.
It's crucial to remember that the complexity of inventory management is proportional to the number of agents involved in the product cycle leading to customer delivery.
In other words, the more agents in the production chain, the more challenging the inventory management process becomes at each stage. Additionally, the risks associated with decisions made by responsible managers also increase.
At this point, it becomes clear that a functional and efficient inventory management model relies first and foremost on effective integration among all agents in the production chain and their processes.
For industries, this means working in synergy not only with raw material suppliers but also with distribution channels and even retailers, as these represent the final stage of the product cycle: sales to the end consumer (sell-out).
Maintaining this entire process well-coordinated depends on tools that ensure the accuracy of information and well-informed decisions by managers. This also requires flexibility and ongoing cooperation in production and logistics.
Inventory management in industries
When it comes to industries, inventory management models can be even more complex. This is because it is from them that raw materials are transformed into products.
These industries need to adjust their production planning around other inventories. Additionally, they need to define differentiated inventories for each stage of product production.
The construction and management of a well-defined inventory are essential for maintaining inventory quality. It also ensures the supply and assortment of products available to distribution channels and retail.
Knowing this, it is possible to conceive at least 3 common types of inventory in industries, namely:
Raw material inventory: This type of inventory consists of the raw materials that industries receive from their suppliers. It is extremely important since production cannot commence without them. If managed ineffectively, raw material inventory can make the difference between scarce or excessive production.
Semi-finished goods inventory: This inventory refers to products that are in an intermediate stage of their production cycle. Typically, these are products that have undergone the initial production process and require special attention or procedures before becoming finished products ready for consumption.
Finished products: Por fim, temos o estoque de produtos acabados e prontos para a venda a distribuidores e varejo. Neste caso é preciso lembrar que o ideal para uma gestão eficiente de estoque é manter um número reduzido de produtos em estoque já que produtos em excesso no estoque significam custos maiores e um risco mais elevado de danificação dos produtos.
Definition of SKUs
Another crucial point for efficient inventory management is the definition of SKUs, an acronym for Stock Keeping Unit in English. Essentially, SKUs represent the minimum unit of your products, meaning the smallest possible unit within your portfolio. SKUs, sigla em inglês para Stock Keeping Unit. Basicamente, os SKUs são a unidade mínima dos seus produtos, ou seja, a menor unidade possível dos produtos do seu portfólio.
The complexity in defining and managing SKUs lies in assigning a unique identifier to each one. Many managers often confuse SKUs with the quantity of items available.
To clarify this distinction, let's consider an industry that produces beverages in 3 flavors and in 2 different milliliter measurements for each flavor. In this case, we would have 6 SKUs, as each flavor would have 2 different measurements, requiring a distinct identification code for each.
Thus, it becomes apparent that the number of items is fundamentally different from the number of SKUs. Once this distinction is made, proper SKU management simplifies sales, as the process of determining quantities and available assortment becomes clearer.
ABC Analysis
In the inventory management process, another element that can make a difference is ABC Analysis: in summary, ABC Analysis defines the key players in your production and the return they bring.
Using data such as sales to end consumers, product tracking, and turnover in distribution channels, it's possible to identify the key products in your portfolio, for example.
ABC Analysis, also known as Pareto analysis, derives its name from the 80/20 rule, where 20% of causes are responsible for 80% of consequences.
The result is a curve-shaped graph where one end features products considered most important and the other end features relatively less important ones. This can also be used to assess the revenue and profits generated by these products.
Solutions enabling effective inventory management
Finally, effective inventory management needs to be tailored to the sector and the specific needs of each industry. Therefore, modernizing processes is becoming increasingly essential.
Today, industries can rely on various alternative solutions that ensure more automated inventory management, focused on strategies that streamline production planning and inventory management.
Issues such as stockouts, lack of assortment, and poorly coordinated production planning make inventory management a demanding process.
However, nowadays, industries across all sectors and their channels can benefit from diverse tools that ensure speed and transparency.
Currently, integrating operations across supply chain agents, including industry, leverages several advancements such as data science, artificial intelligence, and cloud computing to facilitate management processes and make smarter decisions.
With this in mind, Implanta offers solutions that automate data collection and interpretation directly from point-of-sale (POS) and distribution channels. This enables faster and more effective information sharing between industry and its partners.
Implanta's solutions provide visibility into sell-out data, distribution visibility, and product batch tracking. This helps prevent stockouts and ensure product assortment at retail points.
Effective inventory management depends on functional solutions, and Implanta has the solution for your industry.
To learn more about how Implanta's solutions can help you achieve more efficient inventory management, talk to one of our specialists now and discover the best way to integrate your channels in the supply chain.
