Inventory Management is the life-line of any successful retailer or goods-based business.
Many business owners, in fact, share this same sentiment. The principle is simple; it all goes down to maintaining the inflow and outflow of goods. The amount of stock should respond accurately to the fluctuation of demand, that's why it is essential for business owners to find the right balance between having too little and having too much stock in their hands. This would prevent any unnecessary costs and unwanted hitches in the operations of your business.
In this article, we will share with you essential inventory management techniques that can help you manage your inventory in the most effective way possible. Keep reading down below to find out more!
Every successful business starts with careful planning. Thus, it is important for you as a business owner or an inventory manager to construct a detailed inventory management plan that can keep you guided through the whole operations of your business. Here are 2 types of inventory management methods you can implement in your business:
Periodic Method - In this method, the inventory data is only updated or entered in systems after a specific period in time or annually. This is typically useful for small businesses that control a minimal amount of inventory so tasks such as physical inventory count are easy to achieve.
Perpetual Method - This is a method where-in a business makes continuous updates in its inventory records. Since records are updated frequently, this type of method has its advantage of being able to provide up-to-date inventory balance information.
Barcode Data Collection – utilized to have automated data collection through barcode scans that make collecting data a lot easier, precise, and updated.
Cycle Counting – this provides a very sustainable way of eliminating errors such as regularly counting the important items more often than the least important ones.
ABC Analysis – ABC analysis is actually connected to cycle counting, wherein this method, the inventory is segregated and ranked according to their overall value.
Here are 6 essential tips that can help you manage and take control of your inventory better:
FIFO (First In, First Out) – this strategy is an excellent preventive measure to keep older stocks buried behind the shelves, essentially promoting the natural flow of inventory. This is a good way to handle your stock, especially for perishable items or goods to prevent any wastes or losses.
Track Inventory in Real-Time – Being up to date with your inventory allows you to have real-time data of your stock, which would, in turn, provide you to develop a better forecast that can guard your supplies against under-stocking.
Establish Good Connection with Suppliers – Being able to communicate well builds enough trust that can help establish a long-term partnership with your supplier. As the owner or manager, good people management is one of the factors that can help build a strong foundation for your business.
Always Have a Contingency Plan – When there’s a plan A, there’s always a plan B. When it comes to inventory, you have to find ways to mitigate every possible risk. This way, if something “unforeseen” does happen, you would be able to take action and provide solutions immediately.
Use Inventory Management Software and Technology – Technology is very essential nowadays, especially when it comes to record-keeping and data-gathering, which can both be easily accessed with the proper software.
Also known as the Pareto principle, this generally means that 80 percent of the effects of actions stem from 20 percent of its causes. Relating it to inventory, 80 percent of your profits come from about 20 percent of your stock. This would enable you to narrow down and prioritize the 20 percent, which are your most profitable items.
There are a number of ways to approach stock-out situations, but the best thing you can do is to keep your customers well informed and up to date on the following items that may or may not be available. Don’t leave them hanging and give them an exact time-frame as to when the re-stock is going to be, and lastly, you can provide alternatives to give your customers other options. Or better yet, make sure you have enough stock and checkout our wide variety of products in wholesale.
It’s important to manage your inventory properly. Some business owners today might feel their finances slip off their fingers without knowing why due to poor inventory management. So it's important to step up, take control, and redirect your operations to a more efficient and successful path.