Equipment inventory management is no longer an easy task to do. To manage inventory in large companies with thousands of SKUs (And maybe several branches), it requires a sophisticated inventory control system and experienced inventory managers to work efficiently.
The inventory management process can be divided into three main categories: inventory holding, inventory replenishment and inventory control.
What is the inventory management process?
The 3 steps of inventory management
1- Inventory Holding:
It deals with all the processes related to receiving goods from suppliers (Picking orders, shipping, arrival notification…): picking goods before they are shipped to their final destination, inventory transfers from one inventory location to another inventory (Due to sales or transfers between branches), inventory processing and inventory storage.
2- inventory replenishment:
It concerns the reordering of goods from suppliers, production planning, efficient stock rotation and keeping inventory levels at optimum levels.
3- inventory control:
This is the final phase of the inventory management cycle. inventory control systems will help inventory managers to determine inventory requirements based on sales forecasts, and then manage inventory by identifying opportunities for inventory reduction and maximize inventory turns through inventory optimization.
Inventory management cycle
There are two main inventory models: The continuous model and the periodic inventory model. In both cases, there is a receiving cycle that encompasses all the activities that need to be done when inventory arrives in the company. The cycles come back in a continuous inventory model and are spread over time (1 cycle per week, 1 cycle per month…).
The inventory management processes of these 2 models are different. Let’s study them closely:
A. Continuous inventory model:
If inventory replenishment is not planned with a definite time frame, inventory is replenished as soon the inventory level falls below the reorder point.
Quantity to be ordered = inventory quantity on hand – inventory units used
Reorder point = inventory units on hand – inventory units per order + safety stock (3-5%)
The above formula gives us a good idea about how much inventory we will have to order, but it has some downsides: inventory ordering can be too large or too small depending on available promotion opportunities.
Number of inventory cycles per year = inventory turns x number of period in a year
B. Periodic inventory model:
In periodic inventory model, the periodic order quantity is based on:
1- expected demand during a specific period of time (time-based or order-up-to)
2- anticipated sales velocity in a specific period of time (order rate)
3- average vendor lead time + acceptable holding costs.
The periodic model is better than the continuous model in terms of inventory management. But periodic inventory order quantity also needs to be adjusted based on other factors such as seasonal demand variation, sudden unexpected changes in demand…
Inventory management tools and bar codes inventory systems
Inventory control aims at managing inventory costs through what is called “zero inventory level inventory management”. Inventory techniques aim at inventory reduction and inventory minimization.
Inventory control systems are using bar code series 9000 & 30000 to track inventory from receiving to its destination (warehouse, store shelf…). these inventory control system have become an essential part of inventory management strategies used by large companies to maximize efficiency and reduce costs.
There are inventory control strategies that aim at inventory reduction and inventory minimize. Inventory control system can help inventory managers to manage inventory by identifying opportunities for inventory reductions, they aid in inventory optimization through inventory turns maximization.
But don’t get overwhelmed
Don’t let your equipment rental store’s inventory grow out of control. Find out how to manage it with these tips:
- Prioritize what needs to be reordered first
- Designate a person in charge of ordering new items, and make sure they check the order list before placing an order
- Keep a log with information about each item rented so you can know when it is due for return or repair.
These are just some of the ways that you can avoid letting your inventory get out of hand. Here are some tips to make your life easier!
Determine the best time to count equipment
Don’t count while you are very busy. Make sure that there are no customers waiting and then schedule a time when the staff can help complete the task, like after hours or on weekends if possible. Choose a day with good weather so that equipment will be easily visible and not covered in snow or mud (For outdoor storages).
You don’t have to complete inventory in one day, especially if you are counting equipment that is located outside. It may take several days to get all them recorded.
Any equipment that you do not own but have a contract with, must still be included in your inventory. Because if it isn’t on the list of rentals, how will you know if it is missing? You also want to know the condition of equipment you rent from third parties, so that any damage can be included in your rental contract agreement. This will allow you to make an insurance claim if necessary.
Create an inventory list that includes all company assets
This inventory list should include all items, including equipment and assets used in the office like computers, telephones, copy machines and more (Unless you just need your rental/sales items get counted). You can record different items under separate lists if you have multiple equipment inventories to track.
Inventory by location or area
The information on your inventory list should include the items, equipment codes and locations. This would be very important for multi location businesses.
Record equipment description details for quick search
Make your inventory list complete by recording the following information about each item:
– Account Number, which is usually a serial number or model number
– Current Condition (“rented”, “new”)
– Description of Damages if any, so the damage can be included in rental contracts
– Start and End Date (Or check box for the items that was returned)
Establish inventory procedures
Once your list has been established, you need to set up a process for recording the information on this list each time items are rented (For rental businesses). This includes:
- Have your inventory sheets ready
- Locate numbers (SKU) or codes (Barcode/QR codes) on rental items
- Know the items location
- Have access to rental contracts/orders (If you some items out)
- Keep track of who rented each item
Count and record everything on your inventory list
Every business should have accurate inventory records to track their assets. High accuracy equipment inventory and tracking is necessary for many reasons, such as:
- To keep track of business equipment,
- For insurance purposes,
- To report losses,
- To estimate equipment depreciation,
- To make lists of items when moving or upgrading them , etc.
To manage your equipment effectively, inventory is crucial.
Update the list after every counting session
You should update your inventory records as soon as possible after counting equipment (And make sure it’s accurate by comparing it with what you counted before). If you have to record equipment inventory by hand, it’s easy to omit items or count them more than once. To avoid these errors, make sure you compare your equipment list with what is on the floor and that everything is in its place before making any changes to the equipment inventory list.
Keep a copy of your report
Make a copy of the updated inventory for your records and store it in a safe place, such as at home or in a safety deposit box. A hard copy list is necessary if you have to report equipment losses, account for equipment purchases, make insurance claims or go through equipment upgrades and changes. Having inventory records will help save you lots of time in the future. To avoid losing your equipment inventory record, keep a duplicate copy at home or in a safe deposit box at the bank.
Keep track of any equipment purchases or losses
Keep track of everything using this same process so you have an accurate account of all items owned by your company. Following equipment inventory and equipment tracking procedures is important for many reasons. For example: if equipment is stolen or lost, you may need an inventory list to report the loss or to document equipment ownership for insurance purposes. Also, equipment purchasing records are important in areas where tax benefits apply, since you will use them to show your equipment purchases were legitimate.
When taking inventory, make sure to take pictures of the equipment
Having a list of equipment is good, but it’s a good idea to have a visual representation to help keep track of equipment over time. Taking equipment pictures will help prevent losses in case equipment is stolen or misplaced. To avoid thefts, try to take equipment pictures from areas where access is limited. Taking equipment photos will ensure inventory accuracy and equipment tracking.
Use tags on items that are in high demand or have been used recently so they can be easily found when needed
To find equipment quickly, you should place inventory tags on equipment that is used often or has been used recently. Keeping equipment tagged will help make equipment inventory tallying quicker and easier for your equipment managers. The convenient way of tagging items is using RFID tags. Also as it was mentioned earlier, using barcodes and QR codes is an effective way that makes your inventory easier.
Make sure your storage space is organized properly
If you store your items by date, type, or size of item, this will help you find what you need quickly. It will be easier for you to find what you are looking for if the storage space is organized well. For instance, if equipment is only stored in this warehouse and not moved or used elsewhere then your warehouse should have shelves stacked by date – i.e. January inventory has a shelf, February inventory is on the next shelf and so on. Or, Let say you have a bike rental with huge inventory. It would be very helpful if you organize them in racks by size or type.
Store all spare parts in labeled containers so they won’t get lost or mixed up
You inventory team can easily count inventory if all spare parts are separated and stored in labeled containers. If you have a lot of inventory, it will be helpful to store them on shelves, racks or cabinets by type or size of the items. You should label each container with the part number and put stickers on inventory tags so they won’t get mixed up during inventory counting. For inventory tags , there should be a part number, description, and quantity on each inventory tag.
The key to success starts with keeping accurate records. Label each piece of equipment with an ID number that corresponds to your inventory sheet for easy reference.
Mark any missing or broken items in your list
As you perform your physical inventory, list any broken or missing items on the spreadsheet (or your inventory management system). This way, all broken or lost equipment will be accounted for and you can easily track repairs. For more expensive items (like cars or electric scooters, you can use GPS tracking.
Add to your inventory when you buy new equipment or replace old ones
Use inventory tags to tag equipment as you buy or replace it. When you use item and remove the item tag, make sure they are accurate and correctly placed back in your warehouse storage space. You should also include the accurate inventory count of those specific items that were replaced on your spreadsheet or inventory management software so there won’t be any confusion later.
To inventory or not to inventory?
Managing your inventory is crucial, but it’s not easy. It’s important that each item be listed correctly along with the quantity you have on hand. But this can be very time consuming and tedious. That’s why equipment inventory management software has been created: to make inventory easier and more effective. An inventory management system (IMS) is software used to manage inventory for rental stores, video stores, etc… The purpose of using an IMS is to avoid loss by always knowing how many items are in stock, where they are located , their value and what condition they’re in . Many useful tools are available to help you organize inventory including order forms, barcode labels , tracking reports – and even online equipment inventory management system.
There are many inventory software systems available and they all vary in features, price points and some even offer inventory apps for mobile devices. What’s right for your business is only a few mouse clicks away!
Inventory management without a software
Without a software it can lead to inventory loss. But how?
According to the experts, equipment inventory management system without a tracking software can be as dangerous as not having inventory at all. Even leaving your inventory in one place can cause it to get lost or damaged. For example, you’re renting out video games and each week you receive new inventory but fail to track what has been rented or returned. The inventory list becomes very cluttered with incorrect inventory amounts and names. It’s also likely that inventory will get damaged or lost while it’s being transported from the stockroom to the rental floor. So, you can conclude that inventory should be carefully tracked if only for safety reasons. Without tracking software, inventory management is difficult and time consuming!
Inventory management with a software
To get the most out of your inventory, you need to maximize its potential by knowing where it is at all times. You want to know when one of your rental items is due back so that you can rent it out again; or an item has been damaged and needs to be repaired or replaced . A good inventory tracking solution will help you do these things by providing real-time inventory updates through an electronic barcode system . With an equipment scanning system, each time a rental item is rented out, it will be scanned with a barcode handheld scanner and the inventory management software will update in real-time .
This way you can know the inventory status of your items at any time. All inventory tracking software comes with an inventory control system which allows you to create barcodes (Or QR codes) for all of your inventory items. In fact, by using an inventory control system, you will be able to print these barcodes directly onto labels so that each item has its own unique label . These barcode labels can then be attached to all of your inventory items so that they are easily recognizable .
Choose the right inventory systems for your business
Many companies offer inventory control solutions but how do you know which one will best suit your needs? The most important factor to determine is the number of items and volume of inventory your business has. Many tracking solutions are available but they have different features: some offer price reports in dollars and cents while others provide reports for inventory profitability analysis. Some will generate invoices, payment reminders and account receivables while others can help with tax reporting .
If you already track inventory manually, it may be time to look into an inventory control system. There’s a lot more advantages than just keeping track of inventory. They can also help make informed purchasing decisions by providing inventory profitability analysis so that you’re able to see, at a glance, which inventory items are the most profitable .
Using an inventory management software is the key
You should have an accurate and complete inventory of all your equipment so you can use them effectively. Having accurate records will also help ensure customer satisfaction. A good inventory management software, helps manage accurate equipment inventory and track important information to prevent losses or damages on rental equipment.
A good inventory management software like Rentrax can help you track equipment and customer information, as well as generate accurate reports for your business. Managing inventory manually can be time-consuming and prone to errors. You should try to keep accurate records of all the equipment in your rental or sale business so you won’t miss any valuable assets or potential revenue opportunities.
Flexibility is the key
Be sure your software or database can accommodate a wide range of items. For example, software for rental stores needs to be compatible with items like “Tables and chairs” used in “Party rentals” as well as “Bikes and scooters” in a “Bike rental shop”.
Like any good equipment inventory system, the category list should include the various information about each equipment item:
- Equipment Type (keywords such as “chair” or “tables”)
- Current Location or Area Assigned (keywords such as “rental store” or “stockroom”)
- Current Condition (“rented”, “new”, “damaged”) – Start and End Date (or check box for items that was returned)
- Equipment Usage Tracking
It should also have a feature that allows you to easily add or remove inventory from your inventory list. For example, when you buy a canoe for your rental store, you can click a button on the inventory management software and it automatically adds those chair items to your inventory list.
As inventory items are returned, you can simply click another button in the inventory management software and it removes those ones from your inventory list automatically. You should be able to generate reports as well, so you can track how much rental revenue comes from each type or category of equipment item.
This kind of inventory control is perfect for anyone running a rental business. It’s also suitable for businesses operating retail chains, because they often need to track their inventory fast and effectively. Like any business that frequently deals with inventory – whether it be factory supplies or even toys at a toy shop – a good point-of rental software helps businesses manage their stock levels easily and effectively with no fuss at all .
Tips to keep in mind
If you are planning to purchase or add equipment inventory software for your business, consider these features when shopping around:
- First, make sure that the software you choose can accommodate a variety of inventory. For example, “Restaurant equipment inventory software” must accommodate equipment items like refrigerators, tables and chairs in addition to office equipment things like computers and copiers.
- You also want to make sure that your software can record the information on your inventory list by location or area for each item. This will help you track the condition of inventory by location or area in your rental business so that you can make claims if necessary.
If you are looking for more features to add to your check list, consider adding features like:
- Importing data from spreadsheet lists
- Specifying minimum and maximum values for each item
You can avoid letting your equipment inventory get out of hand by keeping a log with information about each item rented, and prioritizing what needs to be reordered first. Make sure that you have someone in charge of making the order list for new items so they check the list before placing an order. Using a software is a great help and will help you to save a lot of time to do this all. These are just some ideas! If you’re interested in learning more or joining our Facebook group where we share these tips and inspiration, let us know! We’d love to help make your life easier as well.