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Midsize business

Manufacturing inventory management: 5 steps for success in 2022

While many industries were hit hard by the pandemic and ensuing economic crisis, experts suggest that manufacturing remains at the top of the list for continued disruption—from small manufacturers to large scale.

Major breakdowns of supply chains (from raw materials and work-in-progress to finished products), inflation, and a tight labor market will likely remain steadfast challenges. As such, the time is now for the industry to take action—to devise a plan to improve and streamline supply chains, bulk up its workforce, and enhance client relations.

Why manufacturers have experienced so much disruption 

While today’s supply chains are more forward-thinking than ever, leveraging data and analysis to accurately forecast demand and optimize production, no one could have predicted COVID-19 and the mass disruption it would leave in its wake. Even the most nimble and data-minded manufacturers with sophisticated enterprise resource planning (ERP) and inventory management systems were forced to pivot quickly and rethink their strategy from the ground up.

Inventory management experts Mario Nowogrodzki, CPA. CITP, CEO, and Keith Fileccia, COO, at Mendelson Consulting, agree that the pandemic disrupted manufacturing. 

“Many businesses were hit hard, but manufacturing has been hit especially hard,” said Fileccia. “For this industry, it’s more about proper planning than anything else.”

Both Nowogrodzki and Fileccia attest that with dedicated planning, manufacturing companies can make changes now, beyond just updating inventory management and other technology, to better prepare for a new manufacturing environment.

Getting your house in order

For a manufacturing business, there is certainly more than one house to get in order. In fact, it’s more on point to say that it’s time to get your diversified set of houses in order. The complexity of supply chains (including suppliers, distributors, transportation providers, and the sub-tiers that make up each), a stripped labor market, and a more intentional consumer base (buyers restricting purchases to only the essentials) are pushing manufacturers to make changes, to restrategize, and to approach the future with a new mindset and well-considered planning.

To start the planning process, the following offers a list of sound tips and tactics. This list serves as a starter guide to help you prepare your business to be more agile in the coming years.

Five steps to better manufacturing inventory management

Step 1: Align vision across departments

While getting every department in sync (in relation to the finished goods you sell) is not an easy task, it is a necessary one. 

“You can’t have marketing calling all the shots where production is concerned,” said Fileccia. “Marketing is driven by numbers, so these folks aren’t always thinking about logistics. Make sure that all departments understand the company’s vision and are being realistic about production goals.”

To provide a more detailed example, consider that Manufacturer X transitioned from producing recreational equipment (tents, backpacks) to personal protective equipment (PPE) during the pandemic. Marketing and sales reported high numbers due to increased demand, but should they continue marketing PPE products? Is this in sync with the logistics department? Will the company have continued access to the raw materials required to effectively and profitably produce PPE over the long term? And, if not, has this been communicated to ensure an aligned company vision?

Step 2: Enhance communications and work as a team

Refining internal communications and working as a team are more important today than ever. When COVID-19 hit, many companies were left scrambling to figure out how to survive. Some transitioned to producing alternative products, others began reconfiguring business models and supply chain networks. The rapid pace of change left many in a state of communication chaos.

Going forward, company leaders must devise and implement a structured communications plan. This plan will help ensure that key information is cascaded down through departments and across roles in real time—better aligning the company’s vision among all stakeholders. An informed staff is much better prepared to work as a team because everyone is on the same page and more deeply understands the company’s goals and objectives.

Step 3: Shore up your workforce

More so than most, the manufacturing industry continues to face labor constraints. In fact, historically, this has been one of its leading challenges. And the pandemic placed even more strain on an already stretched-thin labor market.

“Manufacturing has long had constraints where workers are concerned,” said Fileccia. “Welders are a good example. Qualified tradespeople are hard to find and even more difficult to keep long term. This is why manufacturers need to put a plan in place to build a strong labor network.”

Planning initiatives for shoring up your workforce can include:

  • Use experienced operations managers: A seasoned operations team can better identify and correct issues early, helping to maintain an efficient and satisfied labor force.
  • Invest in training: Well-trained employees tend to be more in tune with their role and expectations. A regular training regimen promotes consistency, which fosters higher levels of security and job satisfaction.
  • Provide regular, positive feedback: People do want to be managed, and providing consistent input is part of good management. When employees understand their strengths and weaknesses, it helps them improve and become even more of an asset to the company.
  • Engage in best practices: Adhering to industry best practices not only helps with overall efficiency and profitability, but also enables businesses to proactively identify areas for improvement to continually enhance workplace conditions—and by extension, employee morale.

Step 4: Create a safe environment for workers

A strong focus on safety has many positive outcomes, starting with making employees feel like they are important to the organization. Employees who feel valued by the company are more inclined to follow safety procedures, which leads to fewer accidents and injuries while also boosting productivity. Consider also providing employees with the proper PPE required to perform their duties safely and confidently. Taking proper safety measures will help to retain workers longer term.


“You have to have a workforce to produce the goods, so keeping your people safe should be a top priority,” said Nowogrodzki.

Step 5: Build automation into your workflows

Automating workflow is the key to heightened efficiency across departments and roles. The manufacturing process is made up of multiple tiers and sub-tiers that require structured, uniform processes to handle everything from purchase orders, inventory tracking (both e-commerce and physical), and stock levels to sales and work orders. Also required is full visibility into real-time data. The days of tracking inventory items manually within Excel spreadsheets are over.

Automation begins by adopting the right technologies, such as advanced inventory management software that can seamlessly integrate with your accounting system. The ability to automatically sync data (critical functionality) between solutions better positions manufacturers for successful just-in-time inventory management, maintaining appropriate inventory levels, accurate cash flow forecasting, and the ability to easily track inventory and support effective warehouse management.

Start planning today…

While not an exhaustive list, the tips offered in this guide provide manufacturers with a sound starting point to begin planning for the future. With ongoing uncertainty concerning the pandemic and the economy, redefining business models and building an organization that is agile and pliable is critical.


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