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How to make inventory management more efficient | What are the key points for successful AI implementation?

Table of contents

  • Benefits of streamlining inventory management
  • 4 ways to streamline inventory management
  • Key points for successful implementation of inventory management system
  • How to choose an inventory management system
  • Improving the work environment is also essential for streamlining inventory management.
  • summary

Are you worried about inventory management, which tends to be complicated? Increasing the efficiency of inventory management is one of the major challenges for companies, as it is directly linked to normal business operations.

In this article, we will explain how to improve the efficiency of inventory management, the benefits that can be gained by introducing an inventory management system, and the points that will lead to a successful system implementation. Please refer to it if you are aiming to optimize inventory management

Benefits of streamlining inventory management

Thorough inventory management can be said to be an essential issue for smooth business execution. Inventory management has become increasingly important in these days of rapidly changing social conditions and the risk of unpredictable demand fluctuations.

For example, by streamlining inventory management, you can reduce storage space and costs by eliminating unnecessary inventory. In addition, it provides many benefits, such as preventing human errors such as incorrect ordering and incorrect deliveries that tend to occur with paper-based management, and can be said to lead to improved overall management efficiency.

4 ways to streamline inventory management

Inventory management is a big challenge for companies, and one of the things that bothers them. However, by increasing the efficiency of inventory management, work effort, time, and human errors can be reduced. Look to see if there are areas in your business that can be improved.

1. Perform location management

Location management is essential to accurately grasp the inventory in the warehouse and reduce the labor of picking. There are two main rules for location management: “fixed location” and “free location”.

Fixed location is a method of storing each item in a fixed location, making it easier and less time-consuming to pick items. However, there is a rule that other items cannot be placed even if the space is open, so depending on the type of item, a large storage space may be required.

Free location is a method of storing items in an open location. Although it can respond to inventory fluctuations that change from time to time and can store a large amount of inventory, it can be time-consuming to issue items.

Another method is to combine two location management methods, fixed location and free location, and adopt a “double transaction” method that shortens work flow lines and stores the picking area and stock area separately.

2. Optimize order quantity

By creating a demand forecast for each item and deciding on the ordering method, you can prepare for excess inventory and the risk of stockouts. The main ordering methods are as follows.

・Quantitative ordering method: A method of placing an order when the stock is below a certain amount.
・Regular ordering method
: A method of placing an order at regular intervals.・Simple ordering method
: A method to place an order when you feel that inventory is low due to low demand or by visual inspection.

3. Perform inventory analysis

It is also important to accurately understand your company’s inventory turnover rate. Determine your inventory turnover rate and find out how many items are replaced over a certain period of time.

By analyzing inventory, you can make demand forecasts and smoothly order the appropriate amount. The advantage is that items with a high turnover rate can be moved to a location where they can be easily retrieved, smoothing the flow of work, and items with a low turnover rate can avoid excess inventory.

4. Systematization of inventory management

By introducing an inventory management system and combining it with barcodes, IC tags, etc., you can greatly streamline your operations. By using the tool, you can expect to reduce labor and time and prevent mistakes, and by sharing it among employees, anyone can understand and manage inventory.

Incoming and outgoing information that was previously entered manually can now be viewed in real time by managing barcodes. This will also help reduce excessive orders and orders due to human error.

Additionally, by linking to the system, you can see at a glance where items are stored, making location management much easier.

Key points for successful implementation of inventory management system

Inventory is a future asset, so cash flow must be maintained with appropriate control. By introducing an inventory management system, you can expect to improve work efficiency and reduce time. This will lead to work style reform and will help increase employee motivation.

1. Clarify the issues and understand the current situation

Before implementing a system, start by clarifying what your company’s inventory management issues are. Accurately understand the current situation by collecting data and interviewing employees, and consider introducing the necessary systems. We will also take inventory of all tasks that are dependent on individual employees and aim to optimize management. Creating standards and rules within your company is also an important point.

2. Considering the cost effectiveness of system introduction

Implementing an inventory management system costs money, as well as employee training costs and operating costs. It is also important to simulate what kind of efficiency will be achieved by introducing it and how much cost-effectiveness it will actually produce.

・Loss due to disposal loss and inspection errors
・Opportunity loss due to
stockouts ・Input work time when receiving and receiving goods
・Time spent checking inventory such as picking

By introducing it, you can reduce costs and work hours related to these operations, but depending on the company, there may be cases where the cost-effectiveness of introduction is not suitable, so it is very important to judge. It is also necessary to consider whether it is cost-effective in the long term.

3.Select and implement the system

Once you know that your company needs a management system, select a specific system. In order to smoothly integrate and migrate existing logistics data, it is important to choose a system that is compatible.

If the system is highly versatile, it will be possible to introduce it to e-commerce sites, etc., and the range of uses will expand. From a long-term perspective, durability and ease of use are also important points to check.

4.Review operations as appropriate

Implementing a system is a big project, especially for small and medium-sized businesses. Once introduced, it is not the end; it is important to regularly review your operations and continually make improvements.

Sometimes it may be necessary to differentiate yourself from other companies by leveraging your company’s strengths without relying too much on systems. It is also important to review unnecessary tasks in the system and strengthen the truly important parts.

How to choose an inventory management system

Inventory management systems do not end once they have been introduced; they must continue to aim for continuous employee education and operational optimization.

If the system itself is difficult to understand or the running costs are too high, it will be difficult to maintain and manage it. Therefore, it is important to choose an inventory management system that suits your company.

Provided form

There are two types of partnership formats for inventory management systems: cloud type and on-premise type. The advantage of cloud-based systems is that they are easy to install and operate, as they allow you to rent resources on the Internet and pay a monthly fee. You can comprehensively use services provided by the cloud without having to build your own system.

The appeal of the on-premise model is that it allows for a high degree of freedom in customization, and if you have in-house engineers, you can expect great results from optimizing your own inventory management.

Cooperation with core systems for survival

Many companies have already implemented core systems to manage sales, production, and accounting. It is not easy to rebuild existing systems such as production management, accounting management, ordering, and shift management from scratch. It is also important to choose a system based on whether the systems you are currently using can seamlessly link together and synchronize data without any problems.

Functions other than inventory management

Inventory management systems are specialized for inventory management operations, and their scope of application is limited. Therefore, when selecting a system, we recommend one that has multiple functions such as not only inventory management but also visitor number forecasting and sales forecasting.

By systematizing and centrally managing the entire business, we can expect to improve the accuracy of management decisions and improve productivity and operational efficiency through a one-stop service.

Improving the work environment is also essential for streamlining inventory management.

While it is important to maintain appropriate inventory levels and check liquidity, preparing the work environment is also essential for efficient inventory management. It is also important to create a comfortable working environment by creating and sharing a series of work manuals and reviewing work spaces.

Maintain manuals

A manual is required for efficient inventory management. By creating a manual and standardizing operations, you will be able to manage inventory appropriately and efficiently. Let’s unify the management that was previously handled by a specific person, incorporate it into a manual, and visualize it. If any employee can handle the task, it will also help prevent work from becoming individualized.

organize your space

If your current location management is complicated, you need to organize it, create space, and review your inventory/export management. Even if a convenient system is introduced, it will not be efficient if picking takes time.

Improve storage efficiency and work efficiency by securing a picking area and using a double transaction method to separate stock areas.

Reform staff awareness

If all employees, including employees, are not aware of the importance of inventory management, any attempt to improve business operations may fail. It can be said that the most important thing is to instill the importance of inventory management within the company. If each person recognizes the importance of this and follows the management rules, they will be able to share information in the right amount, which will lead to an improvement in the organizational strength of the company as a whole.


It’s not a word. The introduction of AI makes it possible to reduce human errors and losses.

This will be a very important project as implementing the system will require changing the mindset of employees and migrating and linking existing data. As a result, the inventory management process becomes seamless, which brings great benefits to management.




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