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5 ways MNCs frequently mess up physical inventory management

5 ways MNCs frequently mess up physical inventory management

Physical inventory management is never easy to master, as companies must constantly juggle a wide number of variables and concerns at any particular time. While these issues are present at all companies, they are especially prescient at multinational corporations that operate multiple locations across the globe. Even though physical inventory management is difficult, MNCs can master it by using warehouse inventory management software and avoiding these common mistakes.

1) Holding too much or too little inventory in one location
When it comes to warehouse and inventory management, the Goldilocks principle applies. When MNCs veer too far from an idealized middle ground, they risk incurring losses and becoming uncompetitive in the global marketplace, Dr. Mohamed Zaheeruddin, Associate Professor at the DRK Institute of Science and Technology, wrote in the January 2013 issue of the International Journal of Business and Management Tomorrow. MNCs that have too much inventory in a particular location risk being unable to unload their stores, but having too little in place means that the business may be ill equipped to react to sudden changes in the marketplace.

2) Lack of inventory diversity
According to Zaheeruddin, businesses have three main inventory types: raw materials, work(s) in progress and finished goods. In order to best account for current and future market demand and fluctuations, MNCs must make sure their warehouse facilities have an equal mix of all three. For example, while having more finished goods is great for capturing consumers today, a dearth of raw materials will make it exceedingly difficult to appeal to customers over the next few weeks and months.

3) Warehouses do not reflect local realities
Physical inventory management is about more than numbers, as storage facilities need to exclusively hold goods that a company can later sell. For MNCs, this task is complicated by its international reach. According to E. Kwan Choi, a professor in Iowa State University's Economics Department, one of the biggest challenges that MNCs face is making sure they are properly selling to their audience. For instance, what needs to be kept in a warehouse in London or Paris will likely be quite different than what is required in Beijing or Bangkok because what consumers buy in different parts of the world varies significantly at times.

4) Time is not a factor
Even though MNCs probably have a greater share of their market than their smaller competitors, maintaining that edge by getting goods to market as fast as possible is still key. However, due to its massive supply chain and entrenched bureaucracy, an MNC may not be able to easily optimize its processes with speed in mind. According to Choi, all companies should position their warehousing and production strategies to ensure that consumer demand in any part of the world is met as quickly and efficiently as possible.

5) Lack of control over diverse locations
While its international reach can be an asset, an MNC may not always be able to effectively oversee what is happening at all of its locations. After all, a company headquartered in New York City will likely have little face-to-face contact with its branches in Asia or South America, for example. To address this common dilemma, a corporation can use a singular warehouse inventory management software solution to remotely monitor and optimize any facility no matter how far from headquarters it might be.

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Posted in: Inventory Management

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