For many entrepreneurs, inventory management revolves around a single question. That is, “how much stock do we have available for each product we sell?” But there is more to it. Inventory management includes keeping track of all the commodities in your warehouse and the materials your company needs to produce them.
As a small business owner, inventory management is one of the most critical aspects of your success. But increasing demand, cutthroat competition, and supply chain complexity could be significant barriers in the process. To help you out, we have put together some recommendations in this post that make up for the finest inventory management roadmap:
- Do Manual Inventory Counts
You should still engage in manual inventory counts even in this technological era. Of course, the frequency with which you conduct these counts depends on the size of your company. Nevertheless, manual counts are instrumental for the safety net of your day-to-day system.
Additionally, they help you discover faults in your overall workflow. For example, if the prospect of scheduling time to tally all of your stock at once seems daunting, consider performing cycle counts. A cycle count is a type of inventory check that only counts a small proportion of your inventory to save time.
You may, for instance, check the inventory of your hats one month and then your shoes the following month. Since manual counting is tedious work, you should give your staff a relaxed atmosphere for this task. Therefore, we recommend you pick a well-reputed storage facility. Finding a budget-friendly storage facility should not be a difficult task. For example, suppose you live in Houston, TX. In that case, you should Google “storage facility Houston TX” to explore different services available in your area.
- Set Up A POS
In most retail organizations, inventory turnover is fast enough to generate a large amount of data. Tracking everything with a spreadsheet or pen and paper will almost certainly make the process seem like a chore that you rather avoid. Besides, many moving parts mean a high probability of errors, which might skew your inventory data.
When you use a POS system, inventory management becomes a lot easier. Your inventory levels are automatically updated each time a product is sold. Probing your system to check how much inventory you have on hand is simple, and detailed inventory reports are usually available for your review.
- Maintain Healthy Relationship With Suppliers
Without the support of vendors, your company will struggle big time. You will often have to approach your vendors, and their prompt response means you could do away with several hassles. Therefore, it is a must to strengthen your relationship with suppliers. You do not have to do anything special about that. Just engaging in the following fundamental steps ensures you will enjoy a solid long-term relationship with your vendors:
- Be a good customer: Suppliers will go above and beyond for you if you are valuable to them, just as you would for a wonderful customer. Make notes of the qualities you appreciate in your customers, and then do the same with your vendors.
- Do not cut off the communication: Maintain constant communication with your vendors and make an effort to set up a time when you can get together for a cup of coffee or tea. Discuss what is working and what may be improved. When both parties share such feedback, it can be a catalyst for new ideas and strengthen the connection even more.
- Recommend them to colleagues: The best way to spread the word about a great vendor is by recommending them to other businesses. It is a great way to acknowledge their products and services. Consequently, your suppliers will be even more devoted to your company in the future.
- Embrace First Bought, First Sold Approach
It is not a smart idea to buy a lot of merchandise and then put it away for months. In contrast, it makes more sense to sell products that came into your inventory first. Freeing up inventory chronologically queuing up items decreases the risk of misplacement or damage to a great degree. This method is also referred to as First-In-First-Out (FIFO).
- Apply The 80/20 Inventory Rule
For most businesses, around 80 percent of a company’s profits come from just 20 percent of its products. So while cutting back on 80 percent less-profitable products is not the smart idea, you must narrow down your focus on maximizing the profits of the 20 percent more-profitable inventory. These items should be handled with utmost care to prevent damage and should be easily accessible in your warehouse.
- Avoid Stocking Too Much Inventory
Many businesses spend too much on inventory. They do so out of the fear of going out of stock. That being said, this is not an intelligent tactic to address the issue. When you buy in bulk, you may be able to get a better deal overall. But it comes at the expense of having less cash available until you sell the stock.
Things go beyond the purchase price. For example, the cost of warehousing or storage can also be high, as the inventory might require a property, energy, and a climate-controlled environment. Worse yet, the products could be marked down and discounted if you do not sell them at the appropriate time.
So what is the solution? To begin with, start figuring out how much and when you will need the inventory. The easiest way to understand how well a product sells is to look at past sales. Analyze it month after month to discover any trends. Look for less visible trends as well as month-end peaks. If you are a new business, it is a good idea to research your competition first.
Conclusion Suppose you are into the eCommerce, wholesale, or retail sector. In that case, having a solid inventory management system should be one of your top priorities. Proper inventory management is critical to a company’s financial well-being. It stands particularly true for small businesses because they do not have enough monetary resources to get back on their feet again after messing up with the inventory. Take our word for it; implementing the measures listed below will ensure you stay on top of the inventory management.