Why Are Your Supplier Inventory Costs So High?​

Posted by Advanced Mobile Group on Aug 24, 2017 11:02:22 PM


Managing any kind of supply inventory for your business is an extremely convoluted process that takes a lot of strategy, time, and precise planning to master. There are a ton of stakeholders that are involved in the process and if any piece of your sequence is off or delayed, it can cause a breakdown in the entire system which could lead to a disaster for you.

One of the messiest parts of the process where you can lose money and time is when your supplier physically hands their shipment off to you. There can often be a discrepancy in the language and information that the suppliers are giving your warehouse and warehouse management, so that your warehouse doesn’t know what to expect or prepare for until the shipment arrives.

Suppliers will issue an ASN (Advanced Shipping Notice) to make you aware of pending shipments at the header level. The ASN may contain information like the PO number and key dates for the shipment, put will fail to include some of the details that the warehouse often needs like specific information about the pallets, containers, etc. To add to that, many suppliers will use labeling that is congruent with their language and processes, but may be incorrect or will fail to use the verbiage and information that your warehouse team needs to organize them. This can throw off your entire downstream process and data that you are collecting about your inventory and supply chain.

The Problems With Supplier Inventory Breakdowns

You begin to see how this can cause massive issues with your inventory and inventory management. You may have already experienced these problems yourself. This is why you may often find dishevelled piles of boxes and pallets in your inventory in receiving, just so you can sort them out and relabel them properly.

This can start to cost your business a lot of time and a lot of money, just to correct the mistakes in the process. Here are some of the ensuing catastrophes that you could be facing as a result.

It takes a lot of time to go through each box and pallet so that they can be accurately labeled, and then moved to the production line. That costs you in terms of both labor and time for your warehouse to reorganize the disaster of the disorganized inventory. Any wrong receipts cause confusion, cost you time to sort through, and increase costs for expedited shipping as a result of being behind schedule.

You are already spending thousands or even millions of dollars every year on shipping costs to get your product from overseas to your docks. Isn’t it kind of infuriating that you could blowing thousands of extra dollars just on reorganizing your inventory, just to move it from one end of your warehouse to the other? There has to be a better way.

What’s the Solution?

This may sound a little oversimplified, but we believe the solution to this frustrating problem lies purely in having the correct labeling. That is of course, contingent upon productive communication between you and your supplier. Whether they be overseas or domestic, having proper communication processes set up with your supplier is absolutely necessary, so that every piece of inventory gets labeled in a way that fits your inventory system perfectly.

Can you imagine that?

A hassle free process that allows you to get your data, your labeling, your barcodes, and your instructions to your supplier so that you don’t have to deal with this inventory mess any longer.

Thankfully, we have new advancements in browser based technologies that allow you to do just what we are talking about. You can use technology like this to send key data straight from your ERP to your supplier so that they have all of the information that they need to label all of your inventory the right way. Not only that, but to label all of the inbound inventory just the way that you want it to be.

What is even better, is that this technology and communication system allows you to track all of your inbound goods with total transparency and visibility. This gives you the ability to respond smarter and even more quickly to abrupt changes in supply and demand.

Enterprise labeling significantly improves the relationship that you have with your supplier by making transactions with them astonishingly easier than what you have been used to. When you start running the simple and easy to use calculations for how much money you are going to be saving by eliminating the process or reorganizing and relabeling your inventory, you will be happy that you made the change.

Why This Process is So Much Easier

The process of ordering inventory from your supplier and making sure it is labeled properly is not as easy as it sounds. We like to think of it as the game telephone, where one person whispers a simple phrase into the ear of the person next to them.

That phrase gets passed around a group of people until it reaches the person who started the game. Most every time you play this game, the phrase becomes totally misconstrued and altered by the time it gets back to the source. The more people, teams, companies, or organizations that you have that are involved, the easier that the message becomes lost or fragmented.

This process eliminates the risk of the labels and verbiage getting changed around, by using the same uniform system across all parties that are involved. Like we mentioned earlier, saving money and your valuable time is all in having your labeling and a simple system to execute it.

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Topics: Asset Tracking

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