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[Column] Inventory: Prescription for Improving the Shortage and Surplus Issues of Construction Machinery
Release time:
2024-09-07
In the after-sales market operation system, an important issue affecting customer satisfaction is the shortage of parts. Contrary to what many people believe, shortages are not caused by insufficient inventory. Shortages and excesses often appear simultaneously, like twin brothers. Companies that frequently experience shortages often have serious excess inventory as well.
This is actually easy to understand. Every company has limited funds. When funds are occupied by useless excess inventory, the company lacks the capital to purchase useful turnover inventory.
The fundamental reason lies in the fact that many companies do not even know which parts should be stocked and which should not. Only when inventory accumulates do they realize that this inventory is ineffective, but by then it is too late. Not knowing how to properly plan inventory inevitably leads to this result. Friends interested in this issue can refer to my new book "Beware of Inventory Mismatch Traps."
Many companies face serious excess issues in their parts warehouses. Some inventory lacks turnover for years, creating a risk of stagnation. At the same time, there are also shortages, with parts urgently needed by customers often out of stock, leading to equipment downtime and causing serious dissatisfaction among customers, even affecting customer reputation, corporate brand, and sales of new equipment. Unfortunately, many companies address the shortage issue by increasing inventory, which inadvertently exacerbates the excess problem, and the shortage issue remains unresolved, leading to customer loss.
To truly solve these problems, it is necessary to analyze inventory issues and improve management in a targeted manner. Some issues belong to inventory planning, while others belong to warehouse management, for example: the system shows that there is stock, but there is none on the shelves. There are also supply chain issues, such as long delivery times, chaotic pricing, and sometimes insufficient personnel can lead to customer loss, such as: inability to get help to confirm parts, long wait times, lack of employee training, etc.
Analyze the reasons for customer loss in parts.
The reasons for customer loss in parts can be divided into the following categories:
- Parts shortage
· Insufficient inventory planning leading to shortages
· Parts are available, but the quantity is insufficient
· Low replenishment efficiency
· Long supplier delivery times
· Parts are in transit
· The system shows there is stock, but there is none on the shelves
- Parts Price
· Quotation does not match system price, price review takes too long
· Quotation time for parts is too long
· Parts prices lack market competitiveness
· Price adjustment cycle is too long
· Parts are on promotion, but the system still shows the original price
- Parts Confirmation
· Part number does not match the product, customer cannot use it
· Customer cannot get employee help to confirm parts
· Employees lack training and cannot provide professional help
- Other Reasons
The difficult economic situation makes it increasingly hard for customers to purchase parts at the original price. With so many competitors eyeing the market, let’s face reality! Companies must first ensure that they have stock and provide the best service support to retain customers. When a customer is ready to purchase parts from you but leaves disappointed, you lose the whole world. Therefore, companies must identify the reasons for customer loss, improve internal management and processes to solve these issues, and ultimately retain customers.
Analyze the reasons for excess inventory.
Similarly, the reasons for excess inventory can be divided into the following categories:
· Inventory planning errors
· Lack of inventory planning software
· Lack of professional personnel for inventory planning
· Products exiting the market
· Reduced equipment operating time
· Parts prices are too high
· Incorrect initial inventory
· Consignment inventory returns
· Backlogs caused by historical reasons
· Other reasons
Companies can regularly hold inventory improvement analysis meetings, analyzing the top 100 SKUs for shortages or excess parts one by one, identifying causes and solutions. Progressing a little each day will eventually lead to reaching the destination; the important thing is to let employees and customers see our progress.
Focus on hot spots
The Black Diamond held the 2024 Annual Employee Points Work Commendation Conference.
