Inventory Management in 11 minutes — Transcript

Full transcript

1. 0:00today we're diving into a super
2. 0:01important topic that's critical for
3. 0:03businesses of all sizes is Inventory
4. 0:05management let's explore what Inventory
5. 0:08management is how it works and why it's
6. 0:10so important for success in business and
7. 0:13as always I'll share some real-time
8. 0:15examples to bring it to life let's get
9. 0:18started first what is Inventory
10. 0:20management Inventory management is the
11. 0:23process of tracking controlling and
12. 0:25managing the stock or inventory that a
13. 0:28business holds this inventory can
14. 0:30include raw materials work in progress
15. 0:32items and finished goods ready for sale
16. 0:35essentially it's about managing what's
17. 0:37coming in what's going out and what's
18. 0:39left in storage but why is this
19. 0:41important effective Inventory management
20. 0:44helps businesses balance supply and
21. 0:45demand you don't want too much inventory
22. 0:48sitting around because that ties up cash
23. 0:50and storage space on the flip side you
24. 0:53don't want too little because you might
25. 0:54run out of products and lose sales
26. 0:57second objectives of inventory
27. 0:59management agement why do businesses put
28. 1:02so much effort into managing their
29. 1:03inventory carefully here are five key
30. 1:06objectives one meeting customer demand
31. 1:09the most important goal is making sure
32. 1:11that you can meet customer demand
33. 1:13without any interruptions if customers
34. 1:16want a product and it's not available
35. 1:18you'll lose sales and damage your
36. 1:20reputation two minimizing holding costs
37. 1:24holding on to inventory for too long
38. 1:25cost money businesses have to pay for
39. 1:28warehousing insurance
40. 1:30and sometimes even product depreciation
41. 1:33three avoiding stockouts a stockout is
42. 1:37when you run out of inventory which
43. 1:39means you can't fulfill customer orders
44. 1:41this results in Lost sales and possibly
45. 1:43even lost customers four efficient cash
46. 1:47flow management you don't want to tie up
47. 1:50too much cash in inventory that's just
48. 1:52sitting on shelves by managing inventory
49. 1:55effectively businesses can use their
50. 1:57cash for other needs like marketing
51. 2:00product development or expansion five
52. 2:03maintaining accurate records keeping
53. 2:06track of your inventory is critical you
54. 2:09need to know what you have what's being
55. 2:10sold and what needs to be reordered to
56. 2:13avoid Errors By achieving these
57. 2:15objectives companies can operate more
58. 2:17efficiently improve profitability and
59. 2:20provide better service to their
60. 2:22customers third types of inventory now
61. 2:25let's dive into the different types of
62. 2:27inventory a business might manage
63. 2:29depending on the type of company
64. 2:31inventory might include one raw
65. 2:34materials these are the basic materials
66. 2:36that are used to produce goods for
67. 2:39example if you're a company that makes
68. 2:41Furniture your raw materials might be
69. 2:43wood nails and paint two work in
70. 2:48progress
71. 2:49WIP these are the items that are in the
72. 2:51process of being made for a car
73. 2:54manufacturer it could be a half
74. 2:55assembled vehicle that's still going
75. 2:57through various production stages three
76. 3:00finished goods these are the products
77. 3:03that are fully completed and ready to be
78. 3:04sold for a retail business these are the
79. 3:07items sitting on shelves waiting for
80. 3:09customers to buy four mro maintenance
81. 3:13repair and
82. 3:14operations items these are supplies that
83. 3:17aren't directly part of the finished
84. 3:19product but are needed to keep the
85. 3:21business running smoothly think about
86. 3:23spare machine parts cleaning supplies or
87. 3:26office supplies five Safety stock this
88. 3:30is the extra stock kept on hand to
89. 3:32protect against unexpected demand or
90. 3:34supply chain disruptions it's like
91. 3:36having a buffer in case something goes
92. 3:38wrong fourth the process of inventory
93. 3:41management let's go step by step through
94. 3:43the inventory management process this
95. 3:46process helps businesses ensure they
96. 3:48always have the right products in the
97. 3:50right amounts at the right time here's
98. 3:52how it works one demand forecasting the
99. 3:56first step is predicting how much of
100. 3:58each product you'll need this is known
101. 4:00as demand forecasting businesses use
102. 4:02historical data market trends and even
103. 4:05seasonal patterns to estimate how much
104. 4:07stock they'll need in the future demand
105. 4:10forecasting is a key element of
106. 4:12inventory management because it helps
107. 4:14businesses avoid overstocking or under
108. 4:16understocking for example a clothing
109. 4:19retailer knows that demand for winter
110. 4:20coats will spike in the colder months
111. 4:23they can use sales data from previous
112. 4:25years to plan their orders for the
113. 4:27upcoming winter season two inventory
114. 4:30tracking once businesses know what they
115. 4:32need the next step is inventory tracking
116. 4:35this involves keeping an accurate count
117. 4:37of how much inventory is on hand whether
118. 4:40it's in the warehouse on stor shelves or
119. 4:42in transit between locations. many
120. 4:44companies use software to automate this
121. 4:46process and track inventory levels in
122. 4:49real time for example large retailers
123. 4:51like Walmart use sophisticated systems
124. 4:54to keep track of inventory in all their
125. 4:56stores warehouses and distribution
126. 4:59centers three reordering and stock
127. 5:02replenishment the third step is
128. 5:04reordering and replenishment when
129. 5:06inventory levels get too low it's time
130. 5:08to place new orders businesses need to
131. 5:10figure out when to reorder and how much
132. 5:12to order to ensure they have enough
133. 5:14stock without over ordering one method
134. 5:17they use is economic order quantity aoq
135. 5:21which calculates the ideal order size to
136. 5:23minimize costs EQ takes into account
137. 5:26both holding costs and ordering costs
138. 5:28helping businesses find The Sweet Spot
139. 5:30between the two four receiving and
140. 5:33storing inventory when the ordered
141. 5:35products arrive the next step is to
142. 5:37receive and store them businesses need
143. 5:39to make sure that the inventory matches
144. 5:41what was ordered and then it's organized
145. 5:43in a way that makes it easy to find and
146. 5:45use this process includes quality checks
147. 5:48to ensure that products meet the
148. 5:49company's standards before they are put
149. 5:51into storage proper storage is crucial
150. 5:54you wouldn't want perishable items to
151. 5:55spoil because of poor conditions or for
152. 5:58fragile Goods to be damaged due to
153. 6:00mishandling five inventory auditing next
154. 6:04businesses need to regularly conduct
155. 6:06inventory audits to ensure their actual
156. 6:08stock matches their records this can
157. 6:10help catch discrepancies due to theft
158. 6:12damage or data entry errors six managing
159. 6:16dead stock sometimes businesses have to
160. 6:19deal with dead stock which refers to
161. 6:21unsold inventory that is no longer in
162. 6:23demand dead stock can drain resources so
163. 6:26businesses often run promotions or sales
164. 6:28to clear out old products
165. 6:30for example clothing retailers often run
166. 6:32end of season sales to get rid of
167. 6:34outdated fashion items seven analysis
168. 6:37and
169. 6:38optimization finally the inventory
170. 6:40management process ends with analysis
171. 6:43and optimization businesses use data
172. 6:46from their inventory management systems
173. 6:47to identify Trends optimize stock levels
174. 6:51and continuously improve their processes
175. 6:53if you're watching and finding this
176. 6:55useful so far make sure to like the
177. 6:57video share it with others who might
178. 6:59benefit And subscribe for more content
179. 7:02like this so fifth techniques in
180. 7:05Inventory management now let's look at
181. 7:07some common Inventory management
182. 7:09techniques that businesses use to
183. 7:11optimize their inventory these
184. 7:13techniques can vary depending on the
185. 7:14industry and the specific needs of the
186. 7:17business just in time jit with jit
187. 7:21companies order products only when they
188. 7:23need them which reduces holding costs
189. 7:26this method is popular in manufacturing
190. 7:28especially in IND Industries like
191. 7:30Automotive for example Toyota is famous
192. 7:33for using jit to minimize waste in their
193. 7:36production process first in first out
194. 7:39fifo this method ensures that the oldest
195. 7:42inventory is sold first which is
196. 7:44especially important in Industries with
197. 7:46perishable Goods like food and
198. 7:48pharmaceuticals ABC analysis this
199. 7:51technique categorizes inventory into
200. 7:53three categories a items high value
201. 7:56items that make up a small portion of
202. 7:58inventory but a large portion of value B
203. 8:01items moderate value and moderate sales
204. 8:04C items low value items that are sold
205. 8:07frequently this helps businesses
206. 8:09prioritize their focus for example
207. 8:12Electronics retailers might treat
208. 8:14expensive gadgets as a items and
209. 8:17accessories like cables as C items
210. 8:21economic order quantity EQ this helps
211. 8:24determine the ideal order quantity that
212. 8:26minimizes both ordering and holding
213. 8:28costs safe stock management companies
214. 8:31hold Safety stock as a buffer to protect
215. 8:33against unexpected spikes in demand or
216. 8:36delays in the supply chain sixth
217. 8:38technology and inventory management now
218. 8:41let's talk about how technology has
219. 8:43transformed Inventory management today
220. 8:45many companies use Inventory management
221. 8:47software that can track stock levels in
222. 8:50real time forecast demand and even
223. 8:53automate the reordering process some
224. 8:55popular software options include sap
225. 8:58Oracle Zoho inventory and QuickBooks
226. 9:02these systems use RFID radio frequency
227. 9:05identification and barcoding to track
228. 9:07items as they move through the Supply
229. 9:09Chain by using technology businesses can
230. 9:12reduce human error optimize stock levels
231. 9:15and react quickly to changes in demand
232. 9:17seventh real-time example of inventory
233. 9:20management let's look at Amazon one of
234. 9:22the world's largest online retailers
235. 9:25Amazon has perfected the art of
236. 9:27inventory management imagine you're
237. 9:29buying a new pair of shoes on Amazon
238. 9:32from the moment you place the order
239. 9:34Amazon's Inventory management system
240. 9:36goes into action they track the stock of
241. 9:39those shoes in warehouses across the
242. 9:41globe and ship them to you in the most
243. 9:43efficient way possible Amazon uses a
244. 9:46combination of the Just in Time approach
245. 9:48and warehousing strategies to ensure
246. 9:51they have the right amount of products
247. 9:52in the right location they also use
248. 9:54real-time data to track every item's
249. 9:57Journey from supplier to Warehouse and
250. 9:59finally to the customer's door eighth
251. 10:02challenges and inventory management of
252. 10:04course no system is perfect and
253. 10:06inventory management comes with its own
254. 10:08set of challenges some of the common
255. 10:10issues include inaccurate demand
256. 10:12forecasting predicting customer demand
257. 10:15can be difficult especially for products
258. 10:17with seasonal or fluctuating demand an
259. 10:20unexpected Spike or drop in demand can
260. 10:22lead to stockouts or overstocking supply
261. 10:25chain disruptions external factors like
262. 10:28natural disasters pandemics or
263. 10:30geopolitical events can disrupt the
264. 10:32supply chain causing delays in receiving
265. 10:35inventory overstocking holding too much
266. 10:38inventory ties up capital and increases
267. 10:40storage costs this is especially risky
268. 10:42for products with a short shelf life or
269. 10:45products prone to becoming obsolete
270. 10:47inventory shrinkage loss of inventory
271. 10:50due to theft damage or administrative
272. 10:52errors can lead to discrepancies between
273. 10:54physical stock and recorded stock levels
274. 10:57cash flow management
275. 10:59investing too much money in inventory
276. 11:01can limit the cash available for other
277. 11:03critical areas of the business so there
278. 11:05you have it a deep dive into the world
279. 11:07of inventory management I hope this
280. 11:10video gave you a clear understanding of
281. 11:12what Inventory management is all about
282. 11:14and if you're looking for a deeper dive
283. 11:17I've linked a recommended book on this
284. 11:19topic in the description below be sure
285. 11:21to check it out thanks for sticking
286. 11:23around if you're watching this I have a
287. 11:25great video on BCG matrixes that you'll
288. 11:27find useful click here to watch it next
289. 11:30see you in the next video