How to make inventory more efficient? Factory challenges, useful tools and systems
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Inventory taking is the task of determining inventory levels at the end of the fiscal year, while inventory management is the task of determining the status of daily purchases and shipments.
Accurate inventory management is essential to avoid lost sales opportunities and the risk of excess inventory, but it requires a great deal of effort and time.
In the manufacturing industry in particular, inventory is an important process for clarifying a company's asset status, but it poses many challenges due to the large number and complexity of items.
In this article, we will clarify the purpose and challenges of inventory in the manufacturing industry and explain specific methods and digital tools for streamlining operations.
If you are in charge of considering ways to improve the efficiency of inventory, please use this as a reference.
What is inventory in the manufacturing industry (factory)?
Inventory in the manufacturing industry is not simply a matter of determining the number of items in stock.
This is an important task that clarifies a company's asset status by accurately counting a wide range of items such as raw materials, work in progress, and finished products and calculating their valuation values.
In factories in particular, it is directly linked to production management and cost control, so it is no exaggeration to say that the accuracy of this technology determines the management of a company.
Purpose of inventory
The purpose of inventory is threefold:
- Get accurate inventory counts and reduce management errors
- Identify unsold or unnecessary inventory and organize it efficiently (measures against inventory backlog)
- Record the correct inventory amount at the time of closing and accurately grasp the company's financial situation (determining the end-of-period inventory amount)
Inventory is conducted to determine the exact quantity of inventory, which is a company's asset, and to reduce management errors.
One of the goals is to identify unsold and unnecessary inventory and lead to efficient inventory management.
In addition, by recording the correct inventory amount at the time of closing the books, we can accurately grasp the company's financial situation and provide information that can serve as the basis for management decisions.
Inventory frequency
Inventory is generally conducted at the end of the fiscal year, but depending on the industry and business type, it may be conducted monthly, quarterly, or semi-annually.
More frequent inventory counts are especially necessary in manufacturing industries where inventory fluctuates drastically, and in factories that produce a wide variety of products in small quantities.
It is advisable to avoid busy periods and plan ahead when production lines are operating less.
Main issues with inventory in the manufacturing industry (factories)
Inventory taking at factories is an essential task for determining accurate inventory levels and clarifying a company's asset status.
However, in factories that handle a wide variety of items and undergo complex production processes, inventory work poses many challenges.
Issues such as unclear management standards, inconsistent data, excessive work hours, heavy human burden, and the risk of human error can make inventory work inefficient and have a serious impact on a company's management.
Here we will explain these issues in detail.
Inventory management standards are not clear
In factories, a wide variety of parts and materials are stored in warehouses, and the management standards for these can often become unclear.
If there is no consistency in where, what, and how much is stored, time will be wasted just searching for inventory.
Furthermore, not having a designated place to store it increases the risk of it being lost or damaged.
Inventory data and actual quantity do not match
Discrepancies between inventory data recorded on the books and actual inventory are a common issue in many factories.
The main cause of data discrepancies is that the movement and use of parts and materials is not reflected in the data in real time, and manual recording errors can also cause data discrepancies. The same can be said for insufficient integration with core systems.
Inventory work takes too much time
Factories handle a huge amount of inventory, so it would take too much time to check all of it.
The task often becomes even more complicated, especially when inventory must be taken without stopping the production line.
Furthermore, the longer the inventory process takes, the more production activities will be halted during that time, increasing the risk of delivery delays and other issues.
The burden of inventory work is heavy
Inventory taking requires manpower, so it is difficult to carry it out alongside daily operations in factories that are short-staffed.
When work is carried out by inexperienced staff, mistakes are more likely to occur.
Furthermore, the heavy workload can lead to a decrease in employee motivation.
Human error prone
Manual counting and recording errors are unavoidable challenges in inventory work.
In particular, working for long periods of time or losing concentration can easily lead to human error.
In addition, variations in the way inventory is recorded by different people can also lead to inconsistencies in the data.
How to make inventory management more efficient in the manufacturing industry (factories)
For manufacturing industries (factories), reducing the workload of inventory taking is probably a common challenge.
The main reasons for the increased burden of inventory work include the task becoming dependent on individual tasks, the need to recheck items due to work errors, and the need to investigate the causes of discrepancies between the books and actual inventory.
In order to solve these issues and make inventory work simple and smooth, it is important to standardize the work and work to improve operations.
Here are some ways to streamline your inventory process.
Regularly check inventory
Regular inventory checks are effective in improving the accuracy of inventory management and reducing the burden of inventory counting work.
By understanding daily inventory fluctuations and conducting regular physical inventory counts, you can minimize discrepancies between inventory data and actual quantities.
Regular inventory management will allow you to discover discrepancies between the books and actual inventory before taking stock, thereby reducing the amount of work required for taking stock.
It is also important to consider the disadvantage that increasing the frequency of inventory checks increases workload and costs, so checking inventory at an appropriate frequency is the key to efficient inventory management.
Add product images to your inventory list
By including product images on the inventory management sheet, visual confirmation becomes easier.
Visual confirmation using images is particularly effective in environments where there are many similar products. This not only improves work efficiency but also enables new staff to quickly grasp inventory.
In addition to managing storage locations, visual information provided by images is an important element for achieving more accurate and efficient inventory management. This is also an effective solution if you are managing your inventory using Excel.
Mark the items you have checked once
To improve the efficiency and accuracy of inventory counting, it is important to mark items that have been confirmed.
Using stickers, tags, and checklists can help prevent double counting and reduce work time.
Landmarks are especially useful when dealing with a large inventory or when you need to find an item later that you were unable to locate.
By utilizing confirmation stickers and management labels, you can improve work efficiency and accuracy, and ensure smooth inventory work.
Prepare an inventory work manual
Developing an operational manual for inventory work is important for standardizing and streamlining the work.
By clearly describing work procedures, tools to be used, points to be careful about, etc. in the manual, the level of work can be standardized and human error can be prevented.
In addition, regular review and improvement of manuals will also lead to improved work efficiency.
By standardizing rules such as counting and entry methods, the same quality can be maintained regardless of who is performing the work, which ultimately leads to improved efficiency and accuracy of the entire inventory process.
Schedule inventory work
In order to improve the planning and efficiency of inventory work, it is important to create a schedule in advance and clarify how the work will proceed.
The schedule should clearly state details such as the date and time of work, the person in charge, and the scope of confirmation, and sharing it with all parties involved will facilitate smooth collaboration.
In addition, by deciding and publicizing the time schedule and personnel allocation in advance, you can carry out work on the day efficiently and reduce mistakes such as missing confirmations and duplicate checks.
Planned schedule management improves the accuracy and efficiency of the entire inventory process.
Key points to remember when taking inventory
What should you pay attention to when actually conducting an inventory?
Here are three points to keep in mind to ensure accurate and smooth inventory.
Review the manual regularly
The key to creating an inventory manual is to regularly review and improve it.
It is important to keep it up to date by taking into account feedback from the field and the introduction of new technologies. It is important to be aware of the need to improve year by year, from 2023 to 2024 to 2025.
It is important to implement the PDCA cycle and identify areas for improvement in procedures and implementation methods by interviewing the workers.
In addition, by making the manuals available online, data sharing and updates become easier, enabling more efficient operation.
By constantly improving the manual, you can improve the efficiency and accuracy of inventory work.
Manage your work hours
By managing the time spent on inventory work, you can promote efficient work progress.
By recording and analyzing your work time, you can identify areas for improvement, and by setting target times, you can improve your concentration and work more efficiently.
For processes that are difficult to automate and take a long time, it is important to review work methods and update manuals.
In addition, if the inventory work takes too long, it will disrupt daily operations, so it is necessary to coordinate personnel and schedules in advance and strive to complete the work on time.
Through proper time management and improvement activities, you can improve the efficiency and accuracy of your inventory work.
Check the quality of the products
Inventory counting is not just about checking the number of items in stock, but also about checking the quality of the products.
Products with quality issues must be managed separately and handled appropriately to prevent defective products from being shipped.
By simultaneously checking defective inventory and the deterioration status of products, more effective inventory management is possible.
Managing inventory from both a quantity and quality perspective helps maintain product quality and improve customer satisfaction.
Can inventory in manufacturing (factories) be automated?
Inventory taking is becoming increasingly automated in manufacturing industries and factories.
Traditional manual inventory taking not only takes time and effort, but also has the problem of being prone to human error.
However, by utilizing technologies such as barcode readers and RFID, the burden of inventory work can be reduced, and there are some cases where automation using robots has been introduced.
In addition, by linking with AI and cloud systems, it is possible to automatically update inventory and manage it appropriately through data analysis, which will further improve the visibility of inventory information.
This is expected to improve the accuracy of inventory management and reduce costs, so many companies are moving forward with automating inventory.
Digital tools and systems that can streamline inventory
By introducing IoT devices and digital tools, inventory management can be made much more efficient, reducing human resources and improving operations, which will also lead to the promotion of digital transformation.
However, when implementing a solution, it is essential to select a solution that is optimized for your business. You need to carefully consider how to choose. Consulting with the vendor may also be effective.
It is important to carefully consider the options before implementation and choose the right tool for your company.
Here we will introduce tools that can help streamline inventory work.
2D barcode
Barcodes come in one-dimensional and two-dimensional (QR code) formats. Two-dimensional barcodes store information both vertically and horizontally, and can also be converted into URLs using a camera app, etc.
In inventory management, work efficiency is improved by reducing manual errors, reflecting data in real time, and converting data instantly.
Two-dimensional data in particular can record large amounts of information compactly, but there are system implementation costs and the hassle of attaching QR codes.
| Benefits of QR Codes | Disadvantages of QR Codes |
| Inventory management is possible simply by scanning using a handheld terminal or tablet. Data can be easily reflected and verified. Human errors such as input mistakes can be reduced. | Costly to implement Attaching QR codes is time-consuming |
i-Repo Scan automatically inputs product number and lot information by simply scanning a 2D code. Real-time integration prevents transcription errors and significantly reduces the on-site data entry workload.
▶ For more details, please visit: https://i-reporter.jp/scan/
RFID (IC tag)
RFID is an abbreviation for "Radio Frequency Identification" and is a technology that automatically recognizes IC tags by reading them with a dedicated reader.
Unlike barcodes, it can read a wide range of information at once, and depending on the product, it is even possible to rewrite the data.
While it is suitable for inventory management in large factories and warehouses, it has the disadvantage of high implementation costs, so it is important to be aware of this.
| merit | Disadvantages |
| Can read all at once Can handle large amounts of information Some products allow information to be rewritten | High implementation cost Reading accuracy may decrease depending on the environment |
i-Reporter's NFC/RFID integration allows for bulk reading of a wide range of data, which is difficult to do with barcodes, and also supports rewriting tag information, making inventory management smarter in large factories and warehouses.
▶ For more details, please click here (https://i-reporter.jp/functions_cat/nfc-rfid-reader/)
Smartphone-based inventory management system
Smartphone-based inventory management apps can be introduced at low cost and are expected to be as effective as barcodes and RFID.
Inventory management can be performed in real time regardless of location, and information sharing is easy.
However, you also need to consider disadvantages such as functional limitations due to pricing plans, loss of the device, and delays due to OS updates.
It is important to carefully select an app that meets your company's needs before implementing it. This method is easy to implement even for small and medium-sized businesses.
| merit | Disadvantages |
| Implementation is possible at a relatively low cost. It is easy to choose an app that is easy for your company to use. Inventory management can be done on a smartphone. | Depending on the plan, functions may be limited. Because it is a smartphone, there is a high risk of losing it. |
AI Camera
AI cameras will be able to automatically count inventory using image recognition technology, improving work efficiency.
The introduction of AI is expected to enable real-time understanding of inventory status, improve the accuracy of demand forecasts, and prevent human error.
On the other hand, there are also environment-dependent issues, such as increased implementation costs, blind spots in the cameras, and on-site workers needing to acquire skills to operate the AI system, so operational skills will be required.
| merit | Disadvantages |
| Real-time inventory management and improved demand forecast accuracy. Reduced manpower and prevented human error. | Performance cannot be fully realized depending on the usage environment High implementation costs Requires AI operation skills |
Weight sensor
Inventory management using weight sensors is a method of determining the quantity of inventory by measuring its weight and quantifying it.
It is effective for managing inventory that is difficult to grasp visually, such as powders and liquids, as well as large quantities of small parts, and allows you to grasp inventory levels in real time, which helps prevent stockouts.
The disadvantage is that inventory management of weight sensors also incurs implementation costs.
"i-Repo Scan" for efficient factory inventory, receiving and shipping, and picking
Improving the efficiency of inventory and stock management not only reduces costs, but also leads to more accurate demand forecasts, which can ultimately lead to increased gross profits. In this article, we have explained the key points for streamlining and digitizing inventory, as well as useful digital tools.
We recommend using the barcode scanning app "i-Repo Scan" to improve the efficiency of inventory counts, inventory management, and picking work in factories. It not only accurately counts inventory, but is also effective in preventing work errors. Because you can use an iPhone or iPad as a handheld terminal, it can be introduced at a lower cost than traditional dedicated devices.
In addition, "i-Reporter" is an inventory management solution that links handheld terminals with a cloud system, helping to grasp inventory status in real time, streamlining stocktaking work, and accurately recording incoming and outgoing goods. Ledger management can also be made more efficient, which is expected to improve the accuracy of overall operations and productivity throughout the factory.
[Efficient inventory management]
Reduce unnecessary work with the barcode scanning app "i-Repo Scan"!
- A dedicated function that counts all items on the screen at once greatly improves the efficiency of inventory work.
・No need for a handheld terminal. Because it runs on a mobile device, installation costs are 1/5 of what they used to be!
- The augmented reality (AR) function makes it easy to see any missed readings or whether the reading is correct.
Click here to download the materials for the on-site document digitization system "i-Repo Scan"
Download the Warehouse Management Manual "Preventing On-site Mistakes and Improving Accuracy" here
