58.Manage+suppliers+and+inventory

What are things a business must do to manage suppliers and inventory?

How to manage suppliers

1. Get quality service from your suppliers

To ensure a productive working relationship, select suppliers who offer a quality service and meet your specific needs.

2. Building good relationships with suppliers

It pays to invest time in building good relationships with your key suppliers. If you can save money or improve the quality of the goods or services you buy from your suppliers, your business stands to gain.

3. Using technology to improve your supply chain efficiency

A high speed internet connection such as broadband will allow you to collaborate more closely with your suppliers through sharing plans, forecasts and consumer data. Sharing such information with your suppliers makes it easier for you to:

• analyse real-time information about sales, orders or market trends

• forecast and react quickly to changes in demand

• improve efficiency - accurate information on stock means you will only order the supplies you need

4. Service level agreements

Service level agreements (SLAs) are agreements or contracts with suppliers that define the service they must provide and the level of service to be delivered, and which also set out responsibilities and priorities.

5. Review your suppliers' performance

It is a good idea to review your suppliers' performance at regular intervals. If you have a service level agreement (SLA) this will help you to assess the business/supplier relationship in the most objective way possible.

If not, even at this stage it may be worth using an SLA to define the terms and level of service you require from your supplier. The review process is particularly important as it will prevent existing suppliers becoming complacent.

How to manage inventory

1. Supplier Assistance

An effective way to manage inventory is to solicit the help of suppliers. Supplier-managed inventory gives the vendor access to the distributor's inventory data. The supplier generates purchase orders based on the distributor's needs. Distribution-intensive companies utilize vendor managed inventory controls to eliminate data-entry errors and to effectively manage the timing of purchase orders.

2. Inventory Control Personnel

An efficient method for managing inventory is to hire a dedicated inventory control specialist. Inventory specialists manage all merchandise items that are on hand and in transit. They also perform adjustments, manage returns, validate received merchandise and implement inventory reporting strategies.

3. Lead Time

Lead time is the amount of time it takes to reorder inventory. Suppliers deliver products at varying times after an order is placed. A useful way to manage inventory is to establish lead time reports to understand how long it takes to replenish your inventory.

4. Monitor Inventory Levels

Having high levels of inventory adds to expenses and increases overhead costs. An effective way to manage inventory is to determine the inventory demands of the business. Limit seasonal inventory and cut back on inventory that does not sell.

5. Customer Delivery

An effective way to manage inventory is to measure inventory turnover and delivery turnaround time. This involves measuring how often your inventory sells and how long it takes to get into the hands of your customers.

6. Inventory Consultant

Many organizations hire inventory consultants outside the company to develop and manage internal inventory systems. Inventory consultants are responsible for maintaining accuracy, cycle counting, shipping and receiving, and managing order-picking operations.

7. Purchase Software

Many businesses manage inventory by designing an inventory management database or purchasing inventory management software. Inventory management software enables distributors to customize the database to fit their individual needs.

8. Product Turnaround

All businesses have products that sell and products that sit on the shelves. A helpful way to manage inventory is to establish a system that pinpoints which products move quickly and which products take more time to sell.

9. Tracking System

Many businesses develop a tracking system to manage inventory and monitor turnaround times. Inventory tracking system formats range from spreadsheets to computer programs. They provide complete inventory control allowing business owners to organize item levels and take cycle counts in distribution centers or stock rooms.

10. Work in Progress

Businesses successfully manage inventory by tracking units as they move through different operational stages. Many businesses utilize some inventory to create other products. Establishing a system to track "work-in-progress" materials allows businesses to adjust order amounts before the inventory gets too low and slows production.