Inventory Management : 10 Steps to a Better Holiday Season
Control buyers: Your planning starts today
October 2009 By Ray Goodman
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4. Clean up vendor and product information. Review and update all your vendor lead times and product costs. Your reorder cycle depends on accurate lead time information. Incorrect product costs can equal lost days you can't afford. Review your data now so you don't lose days later.
5. Qualify your credit with vendors. Ensure that all new vendors are credit-qualified with your accounting department. Don't lose time in the buying process waiting for credit approval.
6. Establish a weekly inbound purchase order tracking process. Domestic vendors sometimes misplace purchase orders. Without tracking, you may not be aware until the order doesn't arrive. This can snowball into six weeks of lost time on a domestic order, resulting in many back orders.
Import tracking is even more critical as these purchase orders tend to be larger and the customer implications of late delivery are greater. The visibility you have with tracking also gives you control over expediting partial quantities when needed.
7. Forecast demand for drop-ship SKUs. It's easy to assume your suppliers have inventory on hand. But they share your inventory challenges during the holidays. If they run out, your customers are still disappointed and you still lose the sales. Help your suppliers stay in stock by providing them with routine forecasts of your expected future sales.
8. Provide forecasts of weekly SKU demand to your distribution center. Share your best estimates of weekly SKU demand to assist your fulfillment center colleagues with bin profiling. Knowing sales volume and timing by SKU is key to their ability to adjust bin size and location at the appropriate times.
9. Identify all products that require special handling. Provide your distribution center with advance notice of products requiring inspection, repackaging and/or kit assembly. Build the handling time into your lead times. If your distribution center requires two weeks to assemble kits, make sure the component inventory arrives two weeks before you need the inventory. Understand when your distribution center is staffed for special handling projects.
10. Keep purchase order dates accurate in your enterprise resource planning system. Provide accurate weekly reporting of incoming back orders so there are no surprises to the distribution center or customers regarding back orders. Try scheduling 30-minute weekly meetings with operations and control buyers to discuss critical incoming orders.
Make these 10 tips part of your annual business practices to manage the season more efficiently and deliver better sales, profits and inventory metrics. Once they're established, you'll have a baseline from which to build year-after-year improvements.
Ray Goodman is senior vice president of multichannel systems provider Direct Tech (rgoodman@direct-tech.com). Joe Palzkill of Direct Tech also contributed to this article.
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