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They are so many challenges in inventory management. some of them are
No real-time visibility into your inventory
Not Automating Reorder Levels
Yearly Inventory Audit
Too much cash stuck in wrong inventory.
1. Ensuring/enabling Stock Integrity at all times.
2. Risk Mitigation from theft/pilferage/natural disasters/lax security.
3. Ensure no stockout happens any time.
4. Planning/implementation of Sudden surge of demand
Let’s face it: Inventory gets a bad reputation, but it’s the essential ingredient for companies to support their customer requirements. They must have what their target customers need in order to keep their business and beat the competition to the punch. While the industry and service levels influence inventory practices, there are general business reasons why some companies have excess inventory, such as supply chain and vendor risk and uncertainty; variable customer demand and forecast accuracy; seasonality leveling; lead-time issues; price hedging; risk of losing loyal customers; and marketing driving sales with new merchandise.
Why gain better inventory control?
Why should you take the time to get a better handle on your inventory control? Well, simply not controlling your inventory can lead to excessive space related costs, higher labor costs, and, of course, loss of business.
Even with product that maintains its quality and utility over time, technical obsolescence, changing consumer preferences, and myriad other factors can significantly reduce the value of inventory. Additionally, excess inventory has other related costs, including:
labor for inventory management, including counting inventory and re-warehousing/stock relocation;
costs associated with refurbishing or damage;
wasted warehouse labor activity working around obsolete inventory; and
Know what you have
In order to fully understand your inventory position, it’s critical that warehouse and DC management know at the stock keeping unit (SKU) level what’s in inventory, how much you have, and where it’s located. Going a step beyond this essential information, managers should know the order history of each SKU.
After you review your inventory, look at some of the key issues such as excess or aging stock, product expiration, and potential opportunities to collaborate with business partners to reduce inventory levels.
However, one of the largest factors contributing to excess inventories in recent years is marketing’s challenge to drive sales. This is the dreaded “marketing versus logistics” scenario that you’ve probably experienced.
Practice change It’s much easier to identify an inventory management problem than it is to fix one overnight. That’s not what you want to hear, but it’s the truth in most situations.
Improving inbound processes Improving inbound processes starts with collaborating with product planning and procurement people to understand their plans for bringing products into your warehouse/DC.
Understand warning signals The easiest way to identify that you have too much—or the wrong inventory—is the amount of dust settled on the product in storage. If you see more than ½ inch of dust, then that’s likely a sign of obsolete inventory.
Ideally, you should get involved with planning the following:
Advance Shipment Notices (ASNs);
shipment delivery windows and carrier delivery requirements;
material acceptance/rejection criteria; and
Properly identifying and counting materials at receiving is critical to good inventory management practice.
Putaway and replenishment Putaway and replenishment should be system directed and scan verified. System decision rules need to be reviewed on a regular basis to ensure that the putaway and replenishment people are directed to take the most appropriate actions.
Improving picking Picking should be system directed and scan confirmed, while paper pick sheets and manual checking is only appropriate for very small operations. Based on your business requirements, voice picking, pick-to-light, or RF directed picking might be more appropriate.
Accuracy verification Order accuracy verification should be automated wherever practical. This can be done most effectively in conveyor based shipping systems.
Common causes of order picking errors include:
having multiple SKUs in a single pick slot location—if you do this correct it immediately;
wrong quantity, which sometimes can be caused by problems with the unit of measure—for example, a case or inner pack is picked instead of an each;
similar items are slotted next to each other;
poor pick list format; and
Improving returns Every warehouse/DC manager hopes he sees the day when nothing shipped gets returned—we should all live so long.
Ultimate goal
As you go about your improvement process, it’s important to keep in mind that the essential factors to improving inventory management are obtaining management commitment; developing effective cross functional teams; realizing accurate data; maintaining good WMS analytics capabilities; keeping appropriate policies and procedures; motivating and training staff; and, of course, putting in a lot of hard work.
The ultimate goal is to achieve inventory optimization to minimize overall cash investment without increasing the risk to the enterprise. All of the factors that influence the actual inventory investment need to be reviewed on a regular basis. Inventory levels should be adjusted to account for changing business needs with the goal of minimizing the likelihood of obsolete or excess inventory.
Challenges for inventory management in Logistics field are
1) Inefficient Process
2) Knowing the Inventory
3) Higher productivity requirements vs resources
4) Customer Demand
5) Increasing competition
