Sustainable Practices in Inventory Management
Managing your inventory is one of the biggest challenges of running a business in the UK. Keeping a detailed eye on your stock levels is important, as it can help avoid over-ordering. For example, it is common for businesses to have issues with over-ordering. This means three problems all at once can occur:
- Your business has more stock than it can sell on certain products, hurting turnover
- Your business impacts the environment due to shipping that was not required
- Your business has to find storage space, which costs money and energy to run
Naturally, these three issues can be a significant problem for your business. Having to pay for the stock you might not be able to sell due to poor inventory management is one thing; impacting the environment due to shipping costs and storage space costs is another. With that in mind, there are some sustainable practices in inventory management that you can put in place to help make your business more eco-friendly.
Where do you start? How can you make your business more sustainable when it comes to inventory management?
Sustainable Inventory Management Practices Worth Investing In
Just In Time Inventory Management
One of the best practices for a business looking to be more sustainable is investing in ‘just in time’ inventory management processes. This helps to reduce excessive inventory investment instead of using automated scheduling to help bring in stock, just as it looks like you are about to run out.
This means you have enough stock to meet the demands of your clientele. At the same time, it reduces the need for major deliveries, which greatly impact emissions. Also, it means you need less storage space for the ‘what if’ storage of goods you might never sell. This makes your business more sustainable from an efficiency and environmental perspective.
Sustainable Supply Agreements
Another aspect to focus on is ensuring that you work with suppliers aware of your desire for sustainability. Work with your suppliers to help ensure they use sustainable delivery and packaging practices. Also, avoid working with suppliers that require you to take on excessive amounts of supply to continue working together.
The best companies to work with on this would be those willing to arrange sustainable supply timelines. They should be amenable to smaller, just-in-time deliveries instead of expecting you to take a wholesaler’s supply level every time you require a shipment.
Many suppliers today are becoming more aware of their client’s desire to be more sustainable, so use that to your advantage. Unless you must use a supplier due to a lack of alternatives, consider switching to more sustainable suppliers in time.
Reverse Logistics
Another sustainable element of modern inventory management is the use of reverse logistics. Reverse logistics makes a lot of sense; it means that if a customer needs to deal with a return of a product, they can send the product back through retailers or manufacturers instead of your company. Since you would likely need to move that same product back to the retailer or manufacturer anyway, this expedites the process whilst avoiding needless transit of an item more than once.
Reverse logistics is becoming very popular in the supply industry. Many companies are finding that it also helps with their inventory management process. The idea of reverse logistics is still fairly new, but when explained to your staff, they will understand why this process can be more beneficial.
Luckily, modern inventory management systems can be designed to include reverse logistics as part of the process.
Sustainable Packaging
Lastly, it might be wise for your business to consider going toward more sustainable packaging. This might mean swapping out things like plastic and Styrofoam for items that are more easy to get rid of.
For example, replacing these products with recycled cardboard, biodegradable tapes, and poly mailers can make packaging more sustainable for items shipped out and for items delivered to your business as part of your inventory management supply chain.
Advantages of Sustainable Inventory Management
Implementing sustainable inventory practices offers significant economic benefits that extend beyond the immediate environmental impact. By minimizing overstock, businesses can substantially reduce the costs associated with storage, insurance, and depreciation, leading to more efficient capital use and improved cash flow. Efficient inventory management also prevents capital from being unnecessarily tied up in stock, allowing businesses to invest in other key areas such as product development or market expansion. Furthermore, reducing excess inventory minimizes the risk of obsolete stock, which can lead to markdowns and profit loss. By aligning inventory levels closely with market demand, businesses not only enhance their operational efficiency but also strengthen their financial footing, making sustainable inventory management a smart economic choice as well as an environmental one.
Automated Inventory Management
Lastly, we highly recommend that any business looking to make its inventory management process more sustainable automates as much of the process as possible. Automation is critical because you can reduce many problems that make your business less sustainable.
As mentioned above, you can avoid having to find storage space for overstock. Storage space costs money to run, keep safe, secure, and heat. This is another expense from a financial and environmental perspective. If you have overstock, too, it might never sell, and thus, you could be wasting valuable resources trying to keep hold of stock that you will never make a profit on.
Automated inventories, though, make it easier for you to ensure that you get only the stock you need when you need it. For example, platforms like Cin7 focus on sustainable inventory management through materials requirements planning (MRP). This is great for ensuring that you are only ordering what you need, especially if you deal in raw materials.
Whether your business deals in goods to sell directly to customers or raw materials used in manufacturing, ensuring your stock management is automated helps avoid bloat and over-ordering. This reduces your carbon footprint and ensures your business spends less on features like storage and shipping.
Integrating Inventory Management with Broader Sustainability Goals
Sustainable inventory management should not stand alone but be part of a comprehensive corporate sustainability strategy. This integration begins with aligning inventory practices with other green initiatives such as using renewable energy sources in warehouses or adopting sustainable sourcing policies. For example, businesses can reduce overall energy consumption by optimizing warehouse layouts to minimize energy use for lighting and heating. Additionally, by ensuring that inventory materials are sourced sustainably, companies reinforce their commitment to environmental stewardship throughout the supply chain. Such holistic approaches not only amplify the environmental benefits but also enhance the company’s reputation as a leader in sustainability, attracting customers and partners who value ecological responsibility. Moreover, this comprehensive integration helps companies meet or exceed regulatory requirements related to environmental impact, further solidifying the business’s standing in a competitive market.
Commit To Sustainable Inventory Management Systems Today
At BlueHub, we regularly assist businesses in investing in sustainable and modern inventory management systems. These systems are designed to help reduce all of the issues discussed. They can help your business order only when needed, reduce storage requirements, and keep your business operational. Inventory management means your firm becomes better at ordering what you need based on the analytics, not what your gut feeling suggests.
Over time, automated inventory management can save your business time, stress, and effort. Consider investing today – contact BlueHub to discuss your inventory management options. We can help you to ensure that your future inventory management process is far more sustainable overall.