10 Essential Tips for Effective Management of Inventory
Many business owners dread the word “inventory”. Traditionally the word inventory only meant one thing that is lots and lots of counting. Small companies can do inventory count every year easily, but for big companies, it requires everyone’s help in the staff.
Inventory management is just as important today as running your business. Bad management of inventory can result in financial losses; this is why a good inventory management system is crucial to have in a company. Just like cash flow, it can either make or break your business
1.Prioritise your inventory
To organize your inventory better, you have to categorize it into priority groups that can help you understand which items will be needed more frequently so they can be ordered in advance. It is also important to save costs in your business; therefore, avoid ordering items that move slowly.
Typically it is suggested to separate new inventory into A, B, and C groups. You can keep the things that are higher in value, but you need a few of them in category A. Items in category C can be lower cost items that sell off quickly. The big group A is what it is between items that are moderately priced and move quickly than items but slowly than C items.
2. Keep track of all product information
Make sure that you keep a record of product information for every item in your inventory. The information should include barcode data, countries of origin, suppliers, and lot numbers. You should also consider tracking every item’s cost over time, so you are aware of factors that affect the change in that item’s price.
3. Practice the 80/20 inventory rule
It is not a rule but something of a standard that 80% of your profit comes from 20% of your product. You should focus your priority on inventory management of this 20% of items. It would be best if you understood the life cycle of these items from when they arrived in your warehouse until they are delivered to the customer. It includes how many of the items you sell in a week or a month and closely monitors all the numbers. These are the items that will make the most money for you, so don’t fall short in managing them.
4. Audit your inventory
Many business owners do a comprehensive count once a year. Others do monthly, weekly, or even daily spot checks of all the inventory items. Regardless of how often you do an audit of your inventory, make it a point to count for your stock regularly physically. Ensure that current inventory matches to the current market demand of customers.
5. Analyse the performance of your supplier
The role of a supplier is very important in retail inventory. If the supplier is unreliable, it can cause problems for your inventory. If you have a supplier that is late mutually and frequently shorts on order, then it is time to take action. Discuss the issues with your supplier in detail and find out what the root of the problem is. In case things don’t work out, be prepared to switch partners or deal with uncertain stock levels, and also the possibility of running out of inventory as a result.
6. Keep consistency in how you receive stock
It may seem like common sense to make sure your incoming inventory is processed in due time, but you must have a standard process that everyone follows, even including all your employees. Small discrepancies in how many new stocks are received can leave you scratching your head at the end of every month or wondering why your numbers don’t match your purchase orders. Also, do make sure that your staff knows the exit process that stock is received every time, and all the boxes are verified, received, and unpacked together.
7. Order re-stocks yourself
Some vendors offer to do inventory orders on your behalf. Initially, this may seem like a good thing as you can save some time off you and your stuff by letting someone else manage the process for a few of your items. But do keep in mind that your vendors don’t have the same priorities as you do. They are looking to move their items to increase their profits while you are looking to stock the things that sell most in your business. Take some time to check the inventory and ordinary restocks of all the items by yourself only.
8. Track sales
This seems like a no-brainer, but it is more than just adding up sales at the end of the day. You should have an idea on a daily basis of what items you sold and how many e you should sell. Because later on, you will need to analyze the data of which items sell faster. Is there any seasonal effect on your sale or any particular day they get sold faster? Understanding not just your sales total but also the bigger picture of how items sell is essential to keep your inventory under control
9. Invest in good inventory management technology
For small businesses, it is easier to manage things manually with spreadsheets and notebooks. But as your business grows, you will need to spend some more time on inventory than you do on your business, or you have a risk of your inventory getting out of control. Good inventory management software makes all the tasks easier for you to handle. Before choosing a software solution, make sure what you need is that an open-source inventory software will be ok or you need to invest in a good premium inventory software. This decision will greatly affect your business, so take some time and think accordingly.
10. Use technology that integrates well
Inventory management software air is not the only thing that you will need to help manage your inventory. Other essential items like mobile scanners and POS systems can also help you stay on track. When investing in new technology, make sure that it is easily integrable with your other systems. A POS system that cannot communicate with your inventory management software might cost you extra time to transfer data from one system to another. If all technology you use is integrable, it makes it easy to manage inventory accurately.