You know you need to manage your inventory better. You’re just not sure how to get started. Here are four easy steps to help you begin:
First steps to successfully track inventory in your shop
1)Start with organizing your shop inventory
Get all of your shop supplies in one location, your associated products in another, and your paint products in yet another. Neatly organize and label your inventory locations, making sure that your fastest moving inventory items are quick and easy to retrieve when needed. With this first step you can organize and begin to track your dry goods and paint, even if only roughly, and improve your inventory on-hand and cash available.
2)Get a good count of your inventory
Count everything that you may need to replenish from the first step. This is a good time to start thinking about how many of each item you actually have versus how many you actually need to keep on hand. The goal here is to minimize your product on-hand but maintain a good level to assure you will not stock out of any product. A good inventory system will help you minimize your safety stock and keep your shop lean.
3)Consider purchasing software to help you track all your inventory activities
Activities include generating orders, tracking consumption, handling transfers between inventory locations, and replenishing stock as it arrives from the supplier. All of these activities can be tracked by a manual process, but are best handled with a computer system. Now is a good time to look into software that can help you manage your inventory and streamline your processes. Using software makes sure all transactions are recorded consistently and reduces errors, while at the same time the software can prompt you at the appropriate times to handle the manual aspects of maintaining your inventory.
4)Implement rules for tracking your inventory and stick to them
Set clear rules about dealing with your inventory process. If someone removes something from an inventory location, be sure it is logged it into the system. If someone re-orders and then replenishes an item, make sure it’s recorded in the system. This not only gives you the most accurate count of items in your inventory system, it also provides a log of items as they move through the system. Nothing is worse than having a system in place and then not logging all of the activity, which will cause your inventory to be inaccurate and make you go back to the step of manually counting your inventory.
Benefits of tracking inventory
You’ll find there are many benefits once you start managing your inventory. There will be less clutter in the shop which in turn can increase efficiency. Reducing inventory is another benefit. This frees up shop space and also gives you more working capital. For example, we have a customer who started using our SmartTrak™ system and was able to reduce their paint inventory on hand by almost 40% after just two months. It allowed them to free up capital and decluttered their paint room.
Another benefit of utilizing an inventory management system is preventing stock outs. When you know exactly what you have on hand you can make sure you don’t run out of any items. A software system can also detect when you hit a minimum level of an item and place an order. The BASF SmartTrak system lets you set minimums and maximums for your inventory to suggest orders which can be used to help keep your shop running at optimal levels.
Tracking your consumption is another benefit. You can track what was mixed or used on a job to aid in job costing. In SmartTrak, the consumption feeds our job costing module that shows your shop how profitable you are on any job so you can make sure you are optimizing your operation.
Knowing the exact valuation of your material on-hand is another benefit to tracking your inventory. If you are using a software system you can generally get this valuation with a simple button click that gives you a snapshot of your inventory at any given time. If you are not using software the valuation can be determined by multiplying each of your materials on-hand by its cost. Either method will give you an accurate valuation of your inventory.
Lastly, managing your inventory helps prevent misusage and theft of paint and all other materials. Simply put, if someone knows their product usage is being monitored they are less likely to over consume paint and materials used in the paint process, and should even act as a deterrent to theft.
Managing your inventory sounds like a lot of work, especially if you’ve been in business 20 or 30 years and don’t have a system in place. With help from your paint supplier and a software system and a little bit of organization on your part, I’m confident you’ll see the benefits of managing your inventory to help you achieve your goals of improving your efficiency and profitability.
