Good inventory management doesn’t just ensure that you have stock on-hand to meet the needs of internal and external customers. It also helps drive down inventory costs, improve cash flow, improve efficiencies and minimize the risk of obsolescence (i.e., when inventory becomes outdated or is no longer in demand).
Companies that have a good handle on their current inventory can also better forecast their future needs—a requirement that became exceedingly important during the pandemic, when supply chain-related disruptions were impacting most industries. Finally, good inventory management helps you avoid stockouts and lost sales; reduce inventory carrying costs; and more readily identify (and sell or use) slow-moving items.
“Organizations from small to large businesses can make use of inventory management to track their flow of goods,” TechTarget points out. “There are numerous inventory management techniques, and using the right one can lead to providing the correct goods at the correct amount, place and time.”
Effective inventory management also helps procurement teams balance the amount of inventory that’s flowing in and out of their operations. “The better a business controls its inventory, the more money it can save in business operations,” TechTarget adds.
Fairly Plentiful Inventory…with Some Exceptions
With just four months left in the current year and 2024 beginning to come into view, now is a good time for electronics buyers to assess their organizations’ inventory management strategies, explore new opportunities and make any changes that will help ensure a smooth transition into the new year.
With the pandemic-era disruptions now retreating, and with new challenges emerging daily, taking the time to do this now can help ward off potential problems and firm up the company’s procurement strategy for the new year.
David Stein, DigiKey’s VP, semiconductors, says that available inventory has been “fairly plentiful” throughout most of 2023. However, there is still a handful of components that have much longer lead times. Knowing this, he says now—when inventory is mostly available—is the perfect time for companies to assess their current bill of materials and seek out alternatives and backups.
“Try to get parts that are currently single-sourced to [the point where they are] at least double- or triple-sourced,” says Stein. “Being proactive now makes the job easier when the crunch time comes and when parts are scarce you can have two or three options versus just one.”
Procurement and engineering professionals should also take the time to review their BOMs and see where they can add sources on single-line items. Next, look for parts that might be in mature decline on the product life cycle from a supplier perspective, Stein says, and get approval to procure them from different sources/suppliers.
Then, check your part and component obsolescence, knowing that many suppliers obsoleted certain products over the last few years. “Professionals should verify that their bills of materials are still all there, that the part numbers are not obsolete and that those items are still available,” Stein says.
Finally, Stein advises buyers to validate parts to ensure those parts are not obsolete. This is something that should be done about every six months. “Not only do parts get discontinued, but sometimes there are better parts to swap in than what was initially designed a year or two ago,” says Stein, who also tells companies to get feedback from a trusted source that can review designs and bills of material, and then share those expert insights with engineers and procurement teams.