4 ways metals companies can improve inventory management

Wil Knibloe III
| 1/17/2023
4 ways metals companies can improve inventory management

Over the past two years, metals companies have continually experienced volatility in their supply chains.

Material shortages, increased lead times, and shipments stuck in ports have caused disruptions in order deliveries and customer relations – not to mention the stress that comes from the pressure to keep up.

Looking ahead, inventory management and planning is a primary issue that metals companies must address if they want to keep a low inventory while maintaining excellent service levels for their customers. Creating excess from overstocking inventory or having to delay orders due to stock shortages are no longer options. If metals companies don’t figure out how to efficiently manage inventory counts, they’ll risk falling behind.

Here are four things metals leaders can start doing today to improve inventory management.

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1. Evaluate and update operations

Supply chain uncertainty is an obstacle every metals company faces, but discovering how it is reflected in an individual organization is the key to overcoming this obstacle. Often, the problem to solve is indirect.

Operational issues that can affect inventory management include:

  • A lack of robust sales, inventory, and operations planning processes
  • Poor communication within a team
  • Misaligned customer account management
  • Not fully utilizing the existing technology
  • Neglecting to act on data produced by technology

Metals leaders should analyze inefficient operations by asking questions about where disconnects might exist in a process and should work on updating or creating new procedures that optimize operations and technology. They can start by looking at the connection between account management and operations. Service levels that have been promised should be the starting point for inventory levels.

Companies already might have the tools to create a more seamless process that can improve their ability to determine inventory counts. They just need to know how and where to start using those tools.

2. Optimize communication

Mismanaged inventory often is a symptom of having a reactive approach to supply chain volatility. However, if metals leaders want to get a handle on their inventory while maintaining service levels, they must take a more proactive approach.

Conversations with sales teams and key customer accounts about order volumes should happen ahead of time. With a better understanding of approximately how much is needed and in what time frame, companies can better manage inventory counts, communicate with suppliers, and create better systems. Plus, customers will appreciate the attention to detail.

Doing what it takes to satisfy customers in the midst of supply chain uncertainty doesn’t have to mean erratic inventory counts. Being upfront and asking intentional questions can improve inventory management, in spite of the supply chain crisis. Leaders should consider how existing features or upgrades to customer relationship management (CRM) and enterprise resource planning (ERP) systems can help improve lines of communication.

3. Keep systems updated

With so much uncertainty within the supply chain, it’s crucial for metals companies to stay on top of the things they can control – like keeping their systems updated with the latest and most accurate information.

Material workers, for example, should fully understand current lead times and update their systems as often as necessary. Having accurate lead times equips them to order accurate quantities and maintain a healthy amount of inventory.

It’s also important to have a consistent process in place to calculate and manage the inventory on hand so it’s always clear what is in stock and what is needed. Having updated information helps prevent overordering or underordering supplies.

A tight grasp on data helps keep a tight grasp on inventory.

4. Invest in and properly operationalize new technology

Once operations have been evaluated and updated, communication has been optimized, and the information in systems has been updated, then it’s time to consider if upgrading or making an initial investment in technology is the next right step.

When it comes to collecting and organizing data, sharing information across teams, and efficiently managing and planning inventory, advanced technology has the ability to accelerate and enhance operations.

The next right move for a metals company to gain control of inventory management and stay ahead of the competition might be to invest in and properly operationalize new technology.

Need help knowing what’s next?

It can be overwhelming and frustrating to know where you want to go but not know the right steps to take to get there, but our team of specialists at Crowe is here to help.

Crowe is one of the largest public accounting, consulting, and technology firms in the United States. With decades of experience in the metals industry, we provide technology solutions like Crowe Metals Accelerator built on Microsoft Dynamics 365™.

We also offer on-the-ground teams that can help you understand where you are and what you need to improve inventory management and overcome supply chain uncertainty.

Get in touch today to learn more about how Crowe can help you build a more sustainable and predictable future for your metals business.

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Wil Knibloe III