You need to manage and control your inventory to reduce your financial risk.
If you don't, this could impact your bottom line significantly and reduce your gross profit.
This is why your business has to create a Standard Operating Procedure. It gives you a detailed description of how to manage your inventory on a regular basis. And make sure you perform the task consistently with a standard method and policy.
Read on as I let you in on what you need to include in your SOP for better inventory control.
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Before we go into the 12 items you should include in your SOP, let's look at the five items all SOP must contain:
Five must have's in your SOP
1. Title Page;
2. Table of contents;
3. Definitions and acronyms;
4. The process in detail of how, when, what and who; and
5. Document management i.e. who will update the SOP and send it to the relevant people. This is usually the manager of the specific process.
Include these 12 items in your SOP
1. To ensure users will understand the processes properly include definitions and acronyms. These must be specific to inventory control.
2. Security and safeguarding of inventory in your company, warehouse or manufacturing process.
3. Receiving an order or invoice from a client and packing the order for delivery to customers.
4. Credit request and inventory received back from clients
5. Tracking of in-transit goods.
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6. Receipt of inventory from the suppliers.
7. Receipt, safe-keeping and delivery of packaging items from suppliers.
8. Packaging and quality control procedures.
9. Stock takes.
10. Record keeping and administration items with regards to inventory control.
11. Destroying obsolete or expired inventory.
12. Document management.
If your business is broken up in separate divisions, for instance the warehouse is located on different premises to the manufacturing or head office; you might need to split your SOP into divisions.
This will ensure you maintain proper quality management per division, as different people are responsible for the different divisions.
The biggest problem with separate SOPs is that one process might not flow into the next and could lead to confusion and even losses for the business.
Make sure management take the time to bring all the SOPs together and that an overall SOP is also generated that splits the different divisions if necessary.
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