© Copyright
by
Robert Moskowitz
Whether or
not you already use a computer in some aspect of your business, you can cost
justify a whole system and its annual operating costs quite easily by starting
to use it for inventory control.
Not every
business requires a large inventory, of course. But most have some requirements
for tracking and reporting on the number and/or location of specific items -
whether they be office computers, raw materials, finished products, items being
held for repair, or whatever. Bar codes on the items make the data entry process
faster and more accurate.
Manufacturers, for example, can't function without raw materials and must
keep track of finished goods. Retailers will nearly always lose potential
business if they fail to have the right stock available for customers. Shippers
are deeply concerned with knowing the quantity, sizes, weights, destinations,
and present whereabouts of all the goods moving through their systems.
Inventory
control - in whatever sense it applies to your business - can be done manually,
of course. But you can almost certainly do it faster, cheaper, and better by
automating some or all of the inventory control process.
Let's
consider just four aspects of inventory control: counting and monitoring the
items actually in inventory; recording and retrieving the precise locations of
items in inventory; recording changes to inventory frequently and precisely
enough so you make possible accurate inventory control; and anticipating
inventory needs well enough to re-order "just in time" and to plan for inventory
handling requirements.
Counting and Monitoring Inventory
Most
businesses conduct a physical count of inventory at least once a year. Between
physical counts, they keep a running total of the inventory presently on hand by
subtracting withdrawals from inventory and adding contributions to inventory on
a daily, weekly, or monthly basis.
A computer
is tailor made for keeping these running totals very easily and accurately.
For
example, daily withdrawals from inventory can be entered into the computer
either as they occur, or at the end of the day. As new inventory arrives, it can
be posted into the computer system with a similarly short delay. By entering
just the additions and subtractions, whether by keypunching or by scanning bar
codes, you greatly reduce the workload needed to keep a running total.
Computers
also make it easier to keep many more sub-totals of specific items within the
overall inventory of goods. If you have 27 different kinds of fish hooks or
monkey wrenches, you might balk at adjusting the totals of 27 different columns
of numbers every day. But with a computerized system, you simply enter each item
coming in and going out of inventory, and let the computer post each change to
the appropriate running total.
In
addition, once the computer system contains the price, description, and other
pertinent information about a particular item, it can be used over and over
again. The computer will associate the descriptive data with the item
automatically whenever you want to see it.
The
immediate result will be more timely and accurate information about items you
presently have on hand.
Recording and Retrieving Inventory Locations
It's
important to know you have 18 left-handed widgets remaining in inventory. But
knowing you have them is of far more value when you also know precisely where to
find them.
Computerized inventory systems do not necessarily help locate items, but
they can assist you and your employees in actually using whatever detailed
location system you have installed.
For
example, let's say you normally keep 10 brands of pantyhose in stock. Each brand
offers dozens of different styles, and dozens of different colors for each
style. Naturally, you need a variety of sizes for each combination of style and
color. The result - and you can see this in any department store, supermarket,
or specialty shop - is a dizzying array of pantyhose that takes up a lot of
floor or shelf space and absorbs countless hours of salesclerks' time as they
comb through the displays, over and over again, looking for the precise
combination of characteristics a customer wants. The same problems hold true for
managing the inventory of any business that deals with a large number of
different items.
With a
computerized system, however, you need display only a small set of samples. Once
a request - whether from a customer or a machine operator - is punched up on the
computer, the system can instantly display exactly how many units remain in
inventory, and precisely where they are located. With robotic picking systems,
the item can also be quickly and accurately plopped onto a shipping desk or
customer service counter.
All by
themselves, the savings in employee time and expensive floor space will quickly
repay the cost of upgrading the inventory system.
Accurate Inventory Control Through Computer Codes
Most
inventory monitoring is done by eye, and the numbers recorded (or punched into a
computer) by hand. But the falling prices of computer coding technology now
makes it very affordable for almost any business to keep track of every item in
inventory with unbeatable accuracy, and even to track the items as they move
from one process to another through the organization.
Computer
coding is accomplished by printing (or purchasing) labels with a special pattern
the computer can read. Most computer coding systems use the distinctive bars on
pressure-sensitive paper. But UPS has now developed a holographic MaxiCode
pattern that stores five times the information in one third the space of bar
coding. If any part of the label is torn off, the computer can recreate what is
missing from what remains.
Once you
install a coding system, slap every item that enters your organization with a
coded label to be read by a wand or fixed scanner. The computer then associates
the code with a particular item, and can follow it through as many processes and
operations as your business makes necessary.
Without
ever picking up a pencil or touching a keyboard, your employees can record the
movement of every individual item they handle, making its location and status
immediately available for reporting and analysis.
Anticipating Inventory Movement and Requirements
After
several months of operation, you can begin to use your automated inventory
system to look back and plot the flow of goods and raw materials through your
operation. You'll almost certainly find bottlenecks you can eliminate,
unnecessary handling processes and costs you can reduce, as well as excess
inventory you can discontinue by combining items with only small or unnecessary
differences.
You can
also begin to schedule shipments from suppliers on a "just in time" basis, and
make sure the loading dock is clear when the next truck pulls in to be loaded or
unloaded.
Computerizing your inventory system brings you the potential for
improving sales and profits through better analysis of inventory trends,
including patterns of delivery and demand. It will almost certainly pay a
significant return on your investment.
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Robert Moskowitz is a business consultant based in Woodland
Hills, CA, who writes frequently on productivity, office automation and
technology. He is the author of The Small Business Computer Book -- A Guide in
Plain English, available from Key Publications at 800-735-0015.
