Qualities of Inventory Manager

An inventory manager is not just a guy lost somewhere between the warehouse racks. Actually, this position requires a unique, “superhero” set of skills, which will streamline a business, if properly applied. Before we dig deeper into those superpower skills, let’s take a look at typical daily activities of an inventory manager.

Superhero Inventory Manager: Daily Routine

1. Recording the Inventory: An inventory manager should keep a complete list of company’s SKUs and their characteristics as well as constantly update this list. For smaller companies, an Excel spreadsheet would be enough, but larger companies should use more sophisticated ERP and inventory management tools. Delivrd provides the convenient and easy-to-use Inventory List functionality.
2. Controlling the Stock: Inventory managers are responsible for tracking and controlling the available inventory items. They should always be aware of the number of new items that come from replenishment orders, and they should know which items are either low in stock or overstock. For these purposes, inventory managers can use specialized software such as Delivrd, with which they can count inventory, register issue/receipt, view transaction history, and more.
3. Working with Suppliers: A superhero inventory manager is responsible not only for finding reliable and cost-effective suppliers, but also for maintaining long-term partnerships with them. In smaller companies, an inventory manager can also process replenishment orders for purchase and delivery of new inventory items. Delivrd makes it possible both to keep a list of suppliers and manage replenishment orders with those suppliers.
4. Coordinating the Warehouse Staff: In larger companies, an inventory manager can lead a team of warehouse employees and control how they receive and record new stock. In other words, they should make sure that each item is on its place and there are no shortages.

This is just a rough list of what a superhero inventory manager can do during the day. But it’s not enough just to do it – it’s important how to do it. Let’s see which skills are essential for a true inventory management superhero.

Superhero Inventory Manager: Superpowers

1. Strong Math Skills: A superhero in the sphere of inventory management should definitely be a math genius. Unfortunately, inventory management software cannot replace human input by 100%, as the stock amount that is available on warehouse shelves should correspond with the amount in the database. And of course the role of an inventory manager requires more in-depth calculations during the inventory planning and forecasting activities.
2. Brilliant Knowledge of Data Analysis and Forecasting Methods: A good inventory manager should be proactive, not reactive. In other words, they should be able to research the current situation with inventory, make forecasts for the future, and always have a backup plan for emergency cases.
3. Multitasking: A job of an inventory manager is quite versatile, from counting and replenishing the inventory to hiring and managing the warehouse staff. Ability to handle all of those tasks and not to go crazy is for sure a superpower!
4. Organizational and Communication Skills: Ability to negotiate with suppliers, make profitable deals, organize supply and delivery – all of this belongs to organizational and communication skills that an inventory manager should possess.
5. Leadership Skills: an inventory manager can also be responsible for coordinating other employees and keeping them motivated, so leadership skills are vital too.
6. Personal Qualities: Reliability, attention to details, ability to concentrate.

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Need & Cost of Inventory

Need to Hold Inventories:

Holding of inventories involves tying up funds of the company and storage and handling costs.

There are three general motives for holding inventories:

1. The Transactions motive: It expresses the need to maintain inventories to facilitate production and sales operation smoothly.
2. The Precautionary motive: It necessitates holding of inventories to guard against the risk of unpredictable change in demand and supply forces.
3. The Speculative motive: It influences the decision to increase or reduce inventory levels to take advantages of price fluctuation.

Cost of Holding Inventory:

Object of inventory management is to maintain the optimum level of inventory.

This optimum level depends on the following costs:

1. Ordering/Acquisition/Set-up Costs: These are the variable costs of placing an order for the goods. Orders are placed by the firm with suppliers to replenish inventory of raw materials.
2. Carrying Costs: These are the expenses of storing goods, i.e., they are involved in carrying inventory.

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Types & Functions of Inventory

Types of Inventory:

There are three types of businesses such as trading or merchandising, manufacturing, and service. Out of these, services are not inventorial. Here, the first classification of inventory is based on the nature of business – Merchandise and Manufacturing Inventory.

Merchandise Inventory:

• It is the inventory of trading goods held by the trader.

Manufacturing Inventory:

• It is the inventory for manufacturing and selling of goods. Based on the value addition or stage of completion, the manufacturing inventories are further classified into 3 types of inventory – Raw Material, Work-In-Progress, and Finished Goods. Another type is MRO inventories which are to support the whole manufacturing and administrating operation.

Functions of Inventory:

• To meet anticipated demand.
• To smooth production requirements.
• To decouple operations.
• To protect against stock-outs.
• To take advantage of order cycles.
• To help hedge against price increases.
• To take advantage of quantity discounts.

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Inventory

Concept of Inventory:

Inventory refers to those goods which are held for eventual sale by the business enterprise. In other words, inventories are stocks of the product a firm is manufacturing for sale and components that make up the product.
Thus, inventories form a link between the production and sale of the product.

Inventory Management Objectives:

Inventory management is performed to simplify the operational activities. Some of the primary objectives for which it is carried out are as follows:

1. Preventing Dead Stock or Perishability: With an optimal inventory level, the chances of wastage in the form of goods spoilage or dead stock.
2. Optimizing Storage Cost: It reduces the chances of maintaining excessive stock, even the requirements are pre-determined, which ultimately cuts done the unnecessary warehousing costs.
3. Maintaining Sufficient Stock: Now, the production department need not worry about the shortage of raw material or goods because of its constant supply.
4. Enhancing Cash Flow: Inventory has a significant impact on the cash flow of the company. With effective inventory management, the organization can ensure sufficient liquid cash to enhance its operational efficiency.
5. Reducing the Inventories’ Cost Value: When there is a constant purchase of goods or stock, the organization can ask for discounts and other benefits to decrease the purchase price.

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