The Best Inventory Management Practices You Need to Use Today

The Best Inventory Management Practices You Need to Use Today

Did you know that around 75% of small businesses in the United States are experiencing rising costs for goods?

Supply chain issues, product shortages, and labor shortages are all contributing to empty shelves. 

If you own a business and want to keep control of your products, you should fine-tune your inventory system. 

Continue reading to learn about the best inventory management practices that you can try! 

Select a Group

One of the best inventory management practices is to identify a group to manage inventory.

When too many hands get on inventory, it’s easier for it to go missing without clear indications of how. Select a group of employees that you trust and appoint one of them as the leader. Each member of the group should get the same training on inventory to ensure consistency. 

Another reason to get a core group for inventory is that each time they take inventory, it’ll get easier. With more exposure to the inventory and storage system, the faster the process will take. 

Practice FIFO

The first-in, first-out method is highly recommended when you are dealing with inventory. 

This is particularly important when you are dealing with products or materials with an expiration date. Restaurants should audit products weekly to ensure that old items aren’t getting pushed to the back. In fact, up to 10% of food that restaurants order gets wasted and never makes it on a plate. 

The beauty and medical industries also must practice this method since their raw ingredients also expire. Pay attention to the items on the shelf that aren’t moving, you can order them less frequently or on an as-needed basis. 

Unpack Your Boxes

If you recieve a lot of small products, you should unpack your boxes.

Taking inventory can get difficult if you have to open every box when you need a count. Get rid of the larger boxes and organize the smaller ones together. Not only does this trick help you find items quicker, but it also prevents items from running out. 

On busy days, it can be difficult to put away inventory while maintaining normal tasks. Have your inventory crew or an individual come in during shipment hours so that nothing gets overlooked. 

Make sure you have tape and box cutters nearby so that unpacking doesn’t take longer than necessary. 

Make a Routine

Conducting smart management for inventory will be impossible if you don’t create and stick to a routine.

Inventory and audits should get conducted on the same day and time each week or month. Depending on how fast you turn your products around, you might need to take inventory more frequently. Many people recommend having inventory scheduled just before large shipments. 

Identifying a consistent time for inventory is also important. Since inventory processes are time-consuming, it’s best to schedule your staff during other hours of the day. 

Get Organized

Labels, alphabetical order, and color-coding are helpful tools for getting inventory organized.

A lack of organization in the storage room could result in misplaced boxes and damaged products. Depending on what makes the most sense for you, you can put like-items together or organize everything alphabetically.

Once you have found a spot for each item, use labels for quick reference. The labels will also guide your staff to put away items in the same place every time they get unpacked.

Don’t forget that you’ll have seasonal and temporary items. You can reserve a section of the storage room for these items so that they don’t ruin your label system. 

Match Your Sheet With the Walls 

Take a look at your inventory sheet the next time you go into the storage room.

If your sheet doesn’t go in the order of the items on the wall, you’ll have some editing to do. It’s highly recommended that your inventory sheet matches the layout in your storage room. Having the sheet match the walls will speed up the process and result in fewer headaches. 

When you have a lot of inventory to track, it can be helpful to break it up into sections. When you take inventory, design a spreadsheet to ensure that no items get missed. When you have everything on your sheet, it’s also easier to see what you missed in front of you. 

Keep Items off the Ground 

Flooding, spills, and mopping are all bound to happen, which is why you need to keep inventory off of the floors.

Shelves will be your best option for storage since they are raised several inches above the ground and can protect your items. You can also use crates and palettes to keep items up and away from water. Another reason you should lift your inventory is that it improves safety in the workplace by reducing clutter. 

Since no one can anticipate the unexpected, you need to protect your inventory from every angle. 

Use Technology 

To make the most of your data, inventory software can help.

Inventory software allows you to upload your counts and products. Some of them will even allow you to scan invoices for record-keeping. As long as your staff is careful of what they type, there are fewer errors when using technology versus pen and paper. 

It’s also a good idea to utilize these types of inventory software since some will alert you of errors. If items don’t get counted or have an abnormally large number, they will get flagged to you. 

Some of the chain stores use tech with inventory by using scanners to count each barcode. For example, Bath & Body Works uses inventory “guns” to scan each item based on their barcode and it then gets uploaded to a software. 

Set Pars 

If your business frequently orders the same products throughout the year, you should create pars.

Pars are quick references that tell you how much of items you should have stocked. Some companies change their pars every quarter to match the seasons while others can keep the same pars year-round. 

To set a par number, you should look at previous inventory invoices and sales. You’ll need to identify which products you ran out of and how much you need to keep up with demand. Although these things may fluctuate, they can be helpful in large storage rooms. 

Any time that you have to toss extra items for expiration, you should note it on the par sheet. You should also note the items that you ran out of and how many more would have been needed to accommodate customers. 

Automate What You Can

There are many layers and details to taking inventory, so if there’s anything you can automate— do it. 

If your staff inputs missing, sold, and damaged products online, you can use the tracking method within your software. Inventory software can automate the task of making charts, identifying rising costs, and more. 

Some vendors work with certain programs and will automatically upload your invoices to your software. Once invoices get accepted all of your information can be viewed online in a more user-friendly version. 

ICE Inventory

In-case-of-emergency inventory is a good idea if you would have to shut down after running out of something. 

Pay attention to the most essential items in your inventory and try to keep a safety stock of them. Putting a few of the essentials in an additional room or away from daily inventory can prevent emergencies. 

It’s helpful to have ICE inventory if you are dealing with inaccurate pars or shipping delays. This safety net should help you until you can place an emergency order.  

Take Your Time

Whether you are taking inventory, doing an audit, or entering data, you need to take your time. 

Rushing through the inventory process will lead to missed items and information. Another issue to worry about if you are rushing is mistyping an amount of an item. For example, it’s not uncommon for people to want to order 5 items and accidentally order 55. 

Before submitting any of your orders, take time to review your amounts and compare them to your par levels. 

Implement the Best Inventory Management Practices Now

Learning the best inventory management practices can prevent you from losing money and time. 

Making mistakes through mismanagement will result in expired products that go wasted. With the proper labeling and system in place, your team can quickly conquer inventory. 

Inventory should always get done by the same people, especially if you want them to learn the layout of the storage room. Don’t be afraid to adapt what you already have in place to perform more efficiently. 

Be sure to read our blog for more content about storing inventory and small business ownership!