Now that you are almost through the busy holiday season (phew!), it’s time to start to reflect on the year that has been.
To give you a focal point on this reflection process from an inventory management perspective, we’ve compiled this comprehensive Ultimate End-Of-Year Inventory and Operations Checklist.
Our checklist covers all aspects of your business as inventory is much more than just keeping count of your stock levels: we cover financials, customer service, marketing to production, workshop maintenance, and operations.
Working through our inventory checklist will help you identify any areas that need improvement or where extra efforts should be allocated for the upcoming year.
Ready to get organized and on-track for 2023? Great - let’s get started!
Prepare and Better Organize your Warehouse Space
Put some thought into ways you can change or improve your warehouse / workshop space to maximize efficiency and reduce bottlenecks - having a well organized, clean and orderly space to work can pay dividends in the long term.
☑️ If you haven’t got one already, create a floor plan that clearly demarkates the different areas you have for the different steps of your manufacturing, packing and shipping phases.
☑️ Ensure that your raw materials are all stored correctly and safely, and that they are labelled clearly for quick access by staff members.
☑️ Use your historical sales data to identify high selling SKUs, and ensure that these products are stored in the most easy to reach locations for your packing staff.
☑️ Take a look at your pack stations and reorganize where necessary to ensure that everyone has a dedicated and well arranged space to work and complete the pick-and-pack process. If you hire seasonal staff, make sure they also have adequate space to work efficiently.
☑️ Create a designated space for tackling “problem orders” so your team quickly continue to move through your non-problematic orders without getting distracted on ones that need more time to complete.
Document your Production Processes
It’s also a great time to ensure that your key processes and workflows aren’t trapped in the heads of a few key members of staff.
☑️ Ensure that you have SOPs (Standard Operating Proceedures) that cover the steps required to produce and ship your products. Make sure you have a process that ensures everyone has read the SOPs that impact on their roles, and also that they can factor in their thoughts and feedback into the documentation as need be.
☑️ Also document any training or onboarding processes you follow with new members of your team.
☑️ Ensure that you have all BoMs (Bill of Materials) documented for your products, so that you have a record of the amounts and types of raw materials required for each batch you create.
Track your Inventory
As a manufacturing business, it’s essential to be on top of one of your biggest sources of expenditure: your raw materials and finished goods.
☑️ Ensure you have a system of checking in raw materials as soon as they arrive from your suppliers, so that all team members are aware of available and real-time stock levels. This step should detail how to unpack and store the received goods, who undertakes this task and how it is updated in your inventory management system. If you handle materials that require lot tracking, ensure also that these numbers are recorded and tracked through your entire production process.
☑️ Make sure you also have a process to check-out raw materials when a batch of product is made, so that utilized stock is removed from your current stock counts.
☑️ Analyse your material usage to predict future requirements for next year: this will enable you to place orders for raw materials so that they arrive before you run out of stock.
☑️ Learn about the differences between periodic or perpetual inventory systems to determine which method is best for your particular manufacturing situation.
☑️ Take a deep dive into your inventory shrinkage situation - how much stock have you lost to damage, or to unknown causes. Draw some conclusions from this data and use this to inform your SOPs and staff training going forward.
Analyze your Financial Picture
Reviewing your financial data will also help you make better decisions going into the new year. This will help you identify areas where you can save money in the upcoming year, and make your business more profitable overall.
☑️ Examine your P&L statement, balance sheet, and cash flow statements to see where you stand financially.
☑️ Identify any areas that you can cut or minimize costs, either with your overhead (indirect) costs or your direct costs of production. This may mean cancelling subscriptions or finding better sources of raw materials.
☑️ Calculate how much inventory you have on hand - if you feel you have too much, make a plan to reduce this via selling at a discount.
Forecast your Sales For Future Success
It’s essential to have a good grasp of past events in order to anticipate future ones. Utilizing your data from prior years is an excellent way to understand which SKUs are popular and when. Monitoring trends during the current year will also allow you to get a firmer understanding on your production process: when you need to make the products so that they are stocked and ready for customers to buy. All this information will be useful to determine the right amount of inventory for the upcoming year and avoid the dreaded over or under stock situation.
☑️ Spend some time gathering your sales numbers and analyse for which months were your biggest ones and why. If you use software to automate this step, ensure you have viewed and have fully digested the relevant reports.
☑️ Take a look at the same time at any external factors that may influence your inventory decisions for the next year. Consider anything from weather patterns to consumer trends as they can have a more significant impact on your sales than you may at first glance think.
☑️ Plan out an estimated production schedule using your forecasted stock numbers, keeping in mind future possible growth
Look at your Customer Service Situation
Good customer service is essential to every business, but especially for those that involve inventory management. It’s thus important to ensure your customer service processes are up-to-date and easy to follow so you can provide a great experience for your customers.
☑️ Create SOPs for handling the common scenarios and questions that you receive from your customers. Creating consistent ways to handle returns, exchanges, faulty items etc can ensure that you are always delivering quality interactions with your clients.
☑️ Ensure your policies are clearly documented and defined on all your sales channels.
☑️ Review customer service inquiries and feedback on a regular basis in order to make any necessary improvements so you can accurately predict consumer demand for inventory. Taking the time to analyze customer service data will help you stay on top of current trends and adjust your inventory management accordingly.
☑️ Take a look at customer service requests of the past year and consider how any changes you introduce can improve both your customer experiences and stock management processes in the coming year.
Stay on Top of New Regulations
Over the year, in the midst of running a busy manufacturing business, it’s possible that new local and global regulations might have come into effect that you are unaware of.Although you may have missed the initial announcements, it’s important to stay up to date with these changes to ensure you’re compliant in the coming year.
☑️ Take the time to check for any new laws or regulations that may have been passed in your state or country and take note of any changes that need to be made from a shipping, warehousing and packaging perspective.
☑️ Make sure you are also aware of any new requirements related to labeling or safety standards for your products. This will help ensure that nothing slips through the cracks when it comes to making sure your business is as compliant as possible.
☑️ Familiarize yourself with GMP practices and see if you can improve your manufacturing processes in line with recommendations and guidance.
Review your Pricing
The end of the year is also an excellent time to review your pricing to ensure that it matches your expectations for your business growth.
☑️ Review your COGM and COGS to ensure they are in line with your expectations given current unit costs for raw materials, labor rates and any other external factors that would impact these figures.
☑️ Calculate your profit margins per product to ensure that they match with your growth targets. To do this, you’ll want to firstly tally your unit cost to produce each product and compare this to your average sale price (including any discounts if applicable)
☑️ Determine if you should raise prices by a percentage across the board or individually, and make a plan to do so across your sales channels ready for Jan 1.
Review your Technology Situation
Finally, it’s important to evaluate if you have the right technology in place to support your inventory operations for the upcoming year.
☑️ Take a good hard look at that Excel spreadsheet / paper-based that handles one or more of your operations processes and see if you can find a better solution (especially if you are planning on growth next year 😉).
☑️ Check that all team members have adequate access to the systems and data they need to perform their job to the best of their ability
☑️ Ensure that you have proper processes for onboarding new members of your team on all technology that you have adopted
Craftybase - Your Inventory and Manufacturing Software Solution
Inventory and MRP systems can help streamline and automate much of your internal production processes and give you a better understanding of what is happening in your supply chain.
Using a platform like Craftybase Inventory + Manufacturing can help you plan and manage inventory better. It helps to track daily inventory movements and profitability across multiple sales channels, making it easier to forecast future demand and estimate inventory costs accurately.
The software also automates much of your business’ time-consuming processes such as reordering, tracking lot numbers, expiry dates and more. Try Craftybase for free today.
Having a plan for all aspects of your inventory strategy will go a long way toward setting yourself up for maker success in the coming year.
Use this Ultimate Inventory Checklist to review your business situation and make any necessary adjustments to set yourself up for success in 2023! Good luck!
Learn more about how to manage your raw material and product stock as a small manufacturing business with our handy guide here: What is Inventory Management? The Complete Guide