Guess Work No More

By investing in the right inventory management system, purchasing departments can reduce operational costs, do advance planning of future purchases and improve inventory turnover

By Vinita Bhatia

There was a time when inventory procurement and purchasing managers at The Lemon Tree Hotels would be left guessing about the inventory that needed to be replenished, leading to additional carrying costs. Guess work in procurement processes increases the risk of excess stock or deficit stock for inventory heavy businesses.
Naresh Kumar, general manager, materials management for the hotel chain, therefore, recommends that purchasing departments should look for an inventory management system that includes an efficient procurement system. This offers benefits such as reduced operational costs, does advanced planning of future purchases, improves inventory turnover, delivers higher service levels, fill rates and enables better negotiation.

When it comes to the start point of an efficient inventory process, firstly, one ought to select the right location of the store with the appropriate layout plan. At Lemon Tree Hotels, the warehouse or store is situated in such an area, where one can access all kind of activities like transportation, loading/ unloading and should be nearest to the food testing laboratory.
“The product data batch tracking systems identify all inventories with identification labels. When products are received or shipped, the IDs are scanned and records are automatically maintained in the inventory management system,” Kumar stated.
To minimise errors in the inventory circle, the system should be able to update the users on real-time location of inventory and changes made to it. It should plan for how much inventory to order, stock and re-order as well. “Moreover, it should assist in storing stocks wisely by checking all stocks inwards and setting threshold stock levels basis peak times when the sales increase or decrease with varying differences. Each supplier should have their own different lead times. If you want to keep your business hassle free and want to avoid out of stock situations, then one should be able to establish the minimum time for restocking under normal conditions and forecast the minimum amount of time for stock level exhaustion,” Kumar recommended.

Since this a critical function, procurement professionals need to establish high standards for accuracy and record management to reduce inaccuracies in the procurement process. “To attain high level of accuracy in record management, one should positively pitch for good software systems and avoid doing manual processes i.e. no manual Purchase Requisition (PR), Purchase Order (PO) or request should entertained,” Kumar said. Technology can be effectively leveraged to reduce these errors that emerge from manual record keeping, especially at regional and unit levels. When used appropriately, it can also reduce the workload and assist in obtaining historical data with the help of one command. It is precisely for this reason that Lemon Tree Hotels is implementing SAP across all its hotels. “To enhance the effectiveness of inventory management systems and other procurement activities, since past one year, we have trained our teams to learn latest techniques of handling various procurement functions. With the help of dedicated team members, all units of Lemon Tree Hotels have been migrated to SAP and will be using the same April 2018 onwards,” Kumar added.

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