If Working Capital is a Challenge, Now is the Time to Reevaluate Inventory Management

Reevaluate Inventory Management

“Domestic and global companies are in the midst of rapid shifts in supply chain planning, operations and inventory management to address coronavirus impacts,” said Thomas W. Derry, CEO of Institute for Supply Management (ISM) in a press release. An ISM survey found 95% of companies expect disruptions in their supply chains due to COVID-19.

Changes in your packaging supply chain can affect how you must manage your inventory of packaging supplies. You may have to change suppliers, adjust the type of packaging you use, change your timelines, or more. All these efforts require time, money, and resources.

In addition to supply chain disruptions, COVID-19 may present other challenges that affect your ability to maintain an efficient and cost-effective packaging inventory management system. You may have a limited workforce to handle inventory management tasks. Perhaps your company has made production changes that require different or more or less packaging. Your business may also be experiencing lower revenue or working capital challenges.

Can your current inventory management system handle these challenges in an efficient and cost-effective manner? Now could be a good time to look at ways to improve your inventory management for packaging supplies.

Managing Packaging Inventory

Your company’s total cost of packaging management is so much more than what you pay for packaging and storage. Total cost includes everything that goes into selecting, procuring, receiving, paying for, storing, transporting, and assembling your packaging supplies. 

“Poor packaging management can create costs throughout the product supply chain that are as much as half of the cost of the product itself,” according to research by the Operational Excellence Society.

An inventory management system that accounts for and optimizes the costs of all packaging-related activities has many benefits. Your company saves money and increases overall efficiency, working capital, cash flow, and competitiveness. Yet, current challenges may make managing packaging inventory more difficult.

Your most efficient and cost-effective option may be to outsource your packaging inventory management. The ongoing benefits of outsourcing to a large, reliable company include:

  • Improve overall process efficiency: Focus on your core business and competencies. Avoid outlying, resource-intensive tasks. Reduce logistics and carrying costs.
  • Free up resources: Improve working capital. Reduce management administration costs. Reallocate employees to other tasks. Reduce sourcing and shortage issues.
  • Save inventory space: Moving inventory storage to a service provider frees your space for production activities and reduces pressure to invest in more facilities or buildings.
  • Achieve direct cost savings: Working with a large company gives you the option to buy from multiple categories, with the benefit of building overall order size and potentially reducing cost.

Outsourcing packaging inventory management can also let you take advantage of just in time efficiencies with reliable delivery timing of supplies. Just-in-time delivery (JIT) means you receive supplies only as you need them for the production process.

The benefits of JIT include less cash tied up in packaging inventory, less space needed for inventory storage, and less chance your packaging will become obsolete, damaged, or otherwise unusable.

For JIT to work, you must have reliable suppliers. One way to ensure reliability is to work with a packaging company that offers products from multiple packaging manufacturers. This provides flexibility to quickly shift to another packaging manufacturer if the need arises.

Inventory Management and JIT as Managed Services From SupplyOne

As part of the Managed Services Program, SupplyOne offers no-cost packaging inventory management to any company that commits to purchasing supplies from at least three of our product categories. We work with you to design the right combination of inventory management services to reduce your company’s direct, indirect, and process costs.

These services can take the form of JIT inventory or customer-owned inventory arrangements that free up working capital and create space for growth. We can remove obsolete inventory from your warehouse and help you keep damage and obsolescence to a minimum. The Managed Services program frees up your employees to focus on other tasks. All these changes can make your company a better marketplace competitor.

As a national company with local offices, we offer both familiarity with your location and the reliability of a large company that has relationships with multiple packaging supplies manufacturers.

Learn more about our Managed Services Program today.