The benefits of inventory management in business cannot be stressed enough. If you are yet to adopt the habit of keeping an eye on your inventory regularly, you are setting your company up for potential errors and long-term challenges. How well you execute this process can either make or break your business.
Evaluating your business stock regularly ensures that everything is on track. It helps you realize if you have the right products in stock to meet consumers’ demand and which products have been selling fast.
However, proper inventory management requires you to have a strategy. If inventory management is not executed correctly, it can result in irreversible losses such as loss of money and sales. To avoid making common mistakes, here are top tips to guide you through managing your business inventory.
- Invest in Inventory Management Software
With technological advancement, you no longer have to handle things manually. You can forget about notebooks, bulky files, and spreadsheets by integrating reliable inventory management software to automate most processes.
Confirm from anyone who uses PIM, and you will realize that the software promotes quality, consistency, and helps you save both money and time. The software allows you to store information in a centralized system easily and to maintain and circulate the data to all sales channels. It enables you to manage data in the form of text, videos, pictures, and attachments and organize them as per product type and other variations.
- Set the Minimum Stock Amount
Setting the minimum amount that should be on hand for each product is the secret to easy product management. You can quickly determine when the stock dips below the preset level and know that it’s time to add the stock. You will know the exact amount of products needed to take you back above the par levels.
The ideal par level for each product differs depending on the demand or how fast the items sell. It would help if you did in-depth upfront research to avoid miscalculations. Moreover, keep in mind that conditions change over time, so you need to make regular adjustments on the par levels.
- Categorize the Products
It would be best to prioritize the already available inventory, which will guide you through the other steps. Categorize the products based on which products sell fast or which ones you need to order more frequently.
Some products are essential to your business, but they are expensive and sell slowly. Categorizing them in such groups helps you to realize what products to prioritize and which ones your business can do without for some time. This way, you will avoid investing in dead stock.
- Keep Records of Product Information
Ensure that you have a centralized system to store all the product information for future reference. Such data include the products’ barcode data, SKUs, information about the supplier, and lot numbers.
It is also recommended that you keep records of the products’ costs to determine if you are making good returns or need to make adjustments. Keeping track of such information gives you something to reference if things fail to add up when auditing.
- The FIFO Approach
FIFO, standing for First In, First Out, is a critical approach in inventory management, especially in collaboration with a utility warehouse partner. This method ensures that products are sold in the same order as they were added to the inventory, a practice that is particularly crucial when dealing with perishable products.
For instance, if your business deals with foodstuff, partnering with a utility warehouse partner who adheres to the FIFO method is essential. This partnership ensures you don’t make the mistake of selling newer items while older stock, which was added earlier, remains unsold. The risk here is that the older inventory might spoil or become damaged, leading to losses. A utility warehouse partner can be instrumental in organizing the warehouse efficiently, where new products are added from the back, ensuring that older stock is sold first, thus adhering to the FIFO principle.
- Inventory Audit
While using product management software makes work more manageable. You must do a comprehensive physical product count at least once per year. Inventory audit or counting items ensures that what you have in stock matches what the system indicates.
- Sales Tracking
While this may sound like an obvious thing, sales tracking is more than adding up sales made by the end of the day. The process involves recording the sold products and updating the inventory totals. As an inventory manager, you also need to analyze the information to establish which products sold fast and why.
It could be a seasonal thing or a trend that matches particular days. By tracking sales, you should understand which products sell together. The goal is to have a broader perspective of how each product behaves to have more control over the inventory.
- Seek Help From Suppliers
Supplier assistance in inventory management helps you save time and maximize accuracy. Ask the suppliers to give you a comprehensive, managed list to provide you with access to the distributor’s inventory data.
You can then use the vendor-managed inventory to eliminate any mistake and ensure that the suppliers’ records match yours. This, in return, helps you to manage order purchase timing efficiently.
- The Just-In-Time Technique
If you are afraid of losing money due to dead stock, you should try JIT. This technique is mostly for risk-takers, but with the right plan, it works perfectly. You keep the inventory at the lowest levels as per the demand and restock just before the products are out of stock. Nonetheless, this approach requires you to plan and forecast accurately not to be caught off guard.
- Ensure Supplier Reliability
You may have everything figured out, but then, the suppliers keep messing up with your inventory management. If your suppliers are not reliable or are always late with deliveries, it is time to make adjustments.
Late deliveries and order shortages make it hard for you to keep track of product performance because you will be dealing with uncertain inventory levels. Discuss how you can avoid such issues or switch partners.
Now You Are Ready to Manage Inventory Like a Pro
It is time for businesses to take control of their inventory management and avoid losing money. With the tips above, you are assured of having a smooth process while saving on costs and keeping your company profitable.
Keep reading our blogs for more tips and guides on inventory management.