Many companies struggle to track inventory as it moves through their warehouses and supply chains. The challenge becomes even more daunting if you’re in an industry that requires OSHA or other regulatory compliance and monitoring.
All companies can benefit from creating inventory transparency in their warehouses, manufacturing centers, and partners.
Today, we’ll break down what inventory transparency is, how it can benefit your business and customers, and how to create a system where you have greater inventory transparency without dramatically increasing your workload.
What is Inventory Transparency?
Whether you think of inventory “transparency” or inventory “visibility,” we’re generally talking about the same thing. Visibility tends to focus a little more on B2B operations, but for the purposes of this article, the two terms are largely interchangeable.
Inventory transparency is the act of disclosing information to your partners, shareholders, customers, and any necessary regulatory bodies. It tends to focus primarily on sharing information with consumers and regulators, but the benefits of having inventory transparency cover all members of your supply chain in one way or another.
Why You Need Inventory Transparency
When it comes to why companies should embrace inventory transparency, the answers can vary.
In the broadest sense, transparency ensures your partners are informed and can make decisions based on real-time information rather than guessing and being caught off guard.
This same principle applies to your customers and end-users. If there’s an inventory or supply chain issue that might affect manufacturing or product delivery, your customers should know that before making a decision.
Going a bit deeper, some industries require inventory transparency. Food and pharmaceutical companies have rules and regulations they’re required to follow. For these businesses, transparency isn’t an option. Not being transparent can lead to fines and other problems with regulatory bodies.
In the simplest terms, all companies can benefit from being more transparent with their inventory and supply chain management. Creating synergistic relationships with partners and keeping customers informed builds better partnerships in the long run.
What are the Benefits of Inventory Transparency?
We touched a bit on some of the benefits of inventory transparency in the last section while discussing why you need better inventory visibility.
In this section, we’ll dig deeper to show you how better transparency can help your business reach new levels.
Here are a few of the most common benefits of inventory transparency.
· Creates Confidence for Suppliers and Customers
Creating supply chain transparency allows both your customers and supply partners to have a better insight into your business. This happens because all parties involved have a deeper understanding of how your supply chain works and what materials, parts, and other items you’re using.
A great example of this is the office chair market. Office chairs run the gamut in terms of price and quality. You can spend less than a hundred dollars on a cheap chair down at your local Staples, or you can spend thousands of dollars on something from a company like Herman Miller.
One of the reasons Herman Miller can command a premium price for their chairs (beyond basic quality) is because anyone researching the company will understand that they manufacture or source parts specifically designed for their chairs.
At the lower tiers of office chairs, you don’t know what parts the manufacturer is using. In most instances, it’s components that are being used in a wide range of other chairs and it’s often cheap.
By understanding how the Herman Miller supply chain works, buyers know they’re purchasing a chair that uses parts made specifically for that chair. And supply partners can rest easy knowing they’re working with a manufacturer who uses other quality components. This allows both partners and potential customers to make more informed decisions and creates confidence for all parties involved.
· Lower Risk of Shortages and Overages
By utilizing inventory transparency, your company can avoid supply chain issues that result in shortages or overages. Both of these things will cost you money.
By understanding your inventory levels and the supply chains of your partners, you’re better able to plan ahead for times when supplies will be scarce (such as during 2020).
By not having to guess at supply and inventory levels, you can avoid over-ordering as well.
Maintaining proper inventory levels is a key way to save money and improve your bottom line.
· Improves Efficiency
By providing detailed data on your inventory and supply chain, it’s entirely possible to increase overall efficiency for both you and your partners.
This is because providing up-to-date information helps everyone see potential issues before they become unavoidable. By being transparent, everyone has access to important information, which makes adjusting on the fly easier and prevents problems in one part of your inventory or supply chain from automatically impacting others.
· Higher Trust Levels
Being transparent with partners and customers creates a greater sense of trust for all parties involved.
Partners will be grateful you’ve brought them into the process and help them better avoid potential issues or challenges that could impact their business.
Customers, meanwhile, will be pleased to have a better understanding of your company’s ethics, as well as your commitment to using quality components and manufacturing practices. Both are an excellent way to delight your customers.
· Increased Revenue
We’ll wrap things up with the issue everyone cares about: increased revenue.
Inventory transparency can impact your bottom line in a number of ways, including:
It can prevent you from carrying unnecessary stock
It can prevent lost sales because you don’t have the items customers want available.
Increased efficiency means you’re not wasting money. Higher trust means customers will buy more and buy more often.
Truthfully, inventory transparency can have a major impact on your revenue. This is just one more reason to put it into practice.
How Can You Implement Inventory Transparency?
At this point, you may be thinking the benefits of creating more transparent inventory practices sounds great, but you don’t know where to start.
We can help.
One of the easiest ways to create more inventory transparency for your business is by utilizing inventory management software.
A good IMS will help you track your inventory, monitor your supply chain, and help ensure you aren’t over or under-stocked through radical inventory visibility.
The analytics of an IMS provides valuable data to make better forecasting and purchasing decisions, showing you things like where you’re spending too much or too little, and where and when you need to purchase more inventory before it’s too late. This will help you keep customers happy while also improving revenue.
These are a few of the broad ways an IMS can help with inventory transparency. Let’s take a moment and look at some more specific examples.
Purchase orders are one area where utilizing a reliable and user-friendly IMS can save you money and increase transparency.
With an inventory management system in place, you’ll save money and reduce labor costs because you’ll be able to operate efficiently with fewer employees. An IMS can track and monitor your purchase orders as they move through ordering to procurement, helping you spot potential problems early.
Picking, Packing, and Quality Control
Another key area where an IMS can help increase your inventory transparency is in the picking, packing, and quality control areas of your operation.
An IMS will help you fulfill orders faster, and with fewer errors. This alone will save you money, but an added benefit is that you’ll be able to operate with fewer employees, thereby lowering labor costs while keeping your operation running smoothly.
Better Overall Visibility
With features like kitting, item attribution, and bundling, inventory management software will provide you with a better overview of your entire operation. The transparency provided by an IMS will make tracking expiration dates easier, allowing you to better rotate your stock.
Beyond this, you’ll also be able to track what’s selling and what isn’t. This will allow you to focus your sales and ordering on what’s working and stop wasting inventory and warehouse space on things that aren’t moving.
In the end, inventory transparency isn’t just about inventory management or warehouse management. Instead, it’s a combination of both designed to improve the overall logistics of your operations.
There are a variety of IMS tools on the market. To get started, it’s best to figure out your needs and your budget, and then schedule demos of products that fit. There are solutions to fit almost every business.
If you need assistance getting started, we’re here to help!
For whatever reason, most companies aren’t immediately on board with the idea of being transparent about their inventory. It’s often because it feels like being transparent gives your competitors insights into things you’d rather they not know.
This isn’t the right way to view this – inventory transparency is a fantastic way to keep your customers and partners aware of what’s happening with your business.
Implementing inventory transparency can help your company reach new heights, both financially and in customer service. If you’re not already working on being more transparent, it’s time to start the process.
Want to learn more about inventory transparency and inventory management? Then be sure to subscribe to our blog so you don’t miss our latest posts!