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Seven habits of highly effective inventory managers

inventory management

By Eric Jensen

All employees of business today are under enormous pressure to work efficiently and bring superhuman powers to their role, but perhaps none are in such demand as highly effective inventory managers! Mistakes made in inventory have devastating results for the bottom line, while success is the true lifeblood for distribution companies. New and changing technology can both help manage inventory, but also eliminate obsolescence. Every business has limited available resources, so allocating them to create the highest value is critical for the supply chain or inventory manager.

Stephen Covey’s best seller, “7 Habits of Highly Effective People,” suggests an approach to being effective in attaining goals. While these habits can be important for all people who wish to be effective, let’s consider my own “7 Habits of Highly Effective Inventory Managers!”

Be Proactive
Effective inventory managers are proactive rather than reactive. While no one has a crystal ball, you need to anticipate the future. There is no perfect forecast, but improving your forecasts can really help you become more proactive. Seek input from the right people when forecasting. Consider the importance of segmentation, or being able to sort your most important suppliers and customers, as critical. ABC analysis helps you to focus on the products which are most important first. Be sure to create processes to measure and interpret your forecast accuracy to make ongoing proactive forecast improvements.

Begin With the End in Mind
Focus on the mission. Yogi Berra wisely said, “If you don’t know where you’re going, you might wind up someplace else.” Effective inventory managers must understand the company vision, purpose and goals to be able to execute an acceptable plan. If your business goal is to offer only the best quality of a line of products, the inventory manager must evaluate every potential SKU through that lens. Know your business. If you are Dunkin’ Donuts, you better not run out of donuts! (Especially the chocolate cream-filled, since that’s my favorite.)

Put First Things First
Execute on most important priorities. There are so many things that you COULD do, but which are the most important and which must be done first? Invest in tools that give you visibility and insight into your inventory such as trends, patterns and key metrics! Having an ABC analysis of your inventory so that you can clearly understand which are your most profitable, which turn the fastest, which are trending up and which are trending down are critical to allow you to make wise decisions and position your business for results and growth!

Think Win-Win!
This might be a tremendous challenge, but when you can truly identify the win-win for your organization, yourself and your customers, you are nearly certain to thrive. Create a win-win between operational savings and service levels. How can your management team
find win-win solutions of its own? Ask yourself, where are our biggest cost buckets? In addition to reducing dead inventory, I suggest another good place to look is anywhere that time is a large component of cost. Removing time is often fruitful, since it can directly
improve service even as it cuts costs.

Seek first to understand, then to be understood
Good communication skills are a key to success in life, work and relationships. Supply chain and inventory management is a lot like overseeing a large catering staff in buying, preparing and serving a banquet in a perfectly orchestrated way. You need the right amount at the right time. This requires listening to the various entities and understanding each one’s needs and priorities and then communicating a well thought out strategy. The act of coordinating the various suppliers so that they perfectly balance the end market demand is truly the core of supply chain.

To put it simply, synergy means “two heads are better than one.” Effective inventory managers and supply chain managers must rely on more than their own thoughts and ideas. As the saying goes, “There is no I in team.” Utilize the team that is around you, and consider the thoughts of those who have a different point of view. Make sure that you are constantly making improvements to your policies and practices or they can become stagnant and ineffective.

Sharpen the Saw
Seek continuous improvement and renewal professionally AND personally! Consider sharpening your skills by looking to get additional training or certification through one of three organizations:

1) APICS offers certification and education including CPIM (Production and Inventory Management and CSCP (Supply Chain Professional)
2 Institute for Supply Management offers CPSM (Professional in Supply Management)
3) Council of Supply Chain Management Professionals (CSCMP) offers SCPro

When you invest in yourself in this way, you are making yourself more valuable to your organization and perhaps can advance your career.

A key to successful inventory management in today’s supply chain is having effective inventory managers who are able to be proactive, prioritize, achieve win-win, communicate well, function as a team and stay sharp. Then, and only then, can you be successful. Are you an inventory manager or supply chain manager? What habit is most important to you? Or what habits have I missed? I applaud you and I’d like to hear from you!

Eric JensenEric Jensen serves wholesale distributors through cutting edge inventory software for Cutwater Solutions. He is also a “chocoholic” and follows the 12-step chocolate program to never be more than 12 steps away from chocolate! Reach him at

This article originally appeared in the Sept./Oct. 2016 issue of Industrial Supply magazine. Copyright 2016, Direct Business Media.


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