6 Ways to Improve Inventory Management

A business's inventory is one of its most important and valuable assets.

Without its inventory, your business isn’t much of a business at all. Talented, loyal employees, effective managers, and innovative ownership are all good and well, but if they’ve not got goods to provide, they may as well not exist.

Proper inventory management can make or break your business, even if you’ve mastered your marketing, sales, and networking.

That’s why managing your inventory effectively is so important.

Comprehensive, accurate, and timely inventory management can provide your business with a host of benefits you may not know you’re missing out on.

Just take a look at a few ways your business stands to benefit from well-managed inventory:

• Enables your business to meet demands: Simply put, good inventory management allows you to provide the goods your customers need without delay. This can help build customer loyalty, and trust and even directly impact your sales

  
  

• Increases the accuracy of your orders and deliveries: Having a detailed idea of what's going on with your inventory is vital for a successful business. It enables you to only order the stock you need when you need it and not leave you with redundant, costly stock.

  
  

• Improves your customer satisfaction: Especially in the competitive world of eCommerce, ”out of stock” notices can be a business's worst enemy. Not having the items a customer is looking for leaves them frustrated and dissatisfied. If you wind up losing these customers and their sales, your odds of seeing them again are slim to none.

  
  

• Improves your storage facilities organization: Disorganization isn’t just frustrating, when it comes to business, it can be extremely costly. Delays when you can’t find stock, increased theft, damage, expired items, etc. tend to thrive in disorganized environments.

  
  

• Reduces the cost and opportunity cost of holding inventory: When you have inventory that doesn’t sell, you wind up tying up a lot of your capital. Good inventory management improves your business's liquidity and means you don’t waste money storing stock you don’t sell.

When you’re running a business, you’re part of an evolving, competitive, and fast-paced world. So when it comes to inventory management, you quite literally can’t afford to not make sure the process is as efficient as possible.

6 Tips to Make Managing your Inventory More Efficient

When it comes to effectively managing your business's inventory, there’s more than one way to skin a cat. Embracing any one of the following processes will see your business avoid losses and improve your bottom line.

With that in mind, to truly get the full value of the goods you have, you may want to combine some of the following tips.

1. Use inventory management software

Inventory management software is one of the most effective and revolutionary processes to become a part of modern business.

With digitalization becoming more and more integrated with business and marketing, inventory management has some of the best effects and ROI for a modern business.

Marketing and advertising can be effective. Great inventory management software is effective.

Good inventory management software should offer several key features. These include:

• Measurement and categorization of products as well as offer automation, providing detailed key insights, and alerts, and be capable of integrating with software elsewhere in your business.
• Barcoding, stock identifying, and inventory tracking feature to improve the accuracy of your record keeping and speed up processes.
• Inventory forecasting and alert features to predict when you’re going to run out to prevent you from running out of stock and alert you to changes that occur with your inventory.
• A mobile component to keep you reliably informed on the go and allow you to communicate how you want changes handled easily.

Choosing the right inventory management software is one of the most important aspects of improving your inventory management. To read more about what makes for a great software platform here.

2. Establish minimum stock levels

Setting minimum stock levels for your most popular products makes controlling your inventory a lot easier. Minimum levels enable your business to reduce the frequency of stock shortages as well as enable you to top up far more accurately.

Your stock levels should be based on how fast your items sell, both on average and during specific times of the year. It’s important to also factor in how long it’s going to take you to receive stock. Doing so can make your order fulfillment much faster, which is only going to positively affect your business in the long run.

Thanks to increasingly powerful inventory management systems, you can even receive notifications when your stock starts nearing those minimum levels. There are even mobile integrations and apps to help more effectively manage and understand your supply chain so that if there is ever a reason you can’t resupply, you know well in advance.

Combining powerful inventory software and good management with data-backed insight to establish minimum stock levels will allow your business to be much more effective.

3. Ensure you store stock safely and minimize shrinkage

Shrinkage is one of the most harmless-sounding, harmful things that can happen to your inventory.

Shrinkage refers to damage, loss, theft, and breakage that can happen to your inventory once it reaches your warehouse or storage facility. A lot of large corporations and companies provide some financial leeway for shrinkage.

Unfortunately, not every business is Amazon or Walmart.

Products that disappear as a result of shrinkage are an unnecessary drain on your business and its potential profits. Stock that is constantly turned over, is essential to a profitable business.

The safer your stock is, the more likely it will be to reach a customer's shopping cart and allow you to fully reap the rewards of the goods you’re providing.

4. Train and develop your managers and employees

As obvious as it sounds, effective, well-trained, and knowledgeable managers are one of the most important aspects of great inventory management.

Source

Great software solutions and products require smart, driven people to marry the two and get the best out of them for your business. Your human resources are just as important as any new program or organizational structure.

Be sure to train your employees on whatever new solutions you plan on implementing. Make sure that they agree that it’s relevant and useful and that they understand how to fully utilize the system.

No matter how great and resourceful your people are, without comprehensive training and development, you’re not going to get the best out of them.

When it comes to something as crucial and impactful as inventory management, that’s the last thing you want.

5. Identify and remove slow-moving stock

Slow-moving stock can be a major source of frustration for any business.

If you deal in goods that expire or go out of date, it can even be far more devastating than you may have thought when you first placed your order.

Source

Expired products become unsellable and therefore represent a direct loss for your business. Products that are slow to move can be irritating and take up valuable storage space. Seasonal items like clothes and gadgets can quickly go out of fashion and become difficult to get rid of without experiencing a loss.

That’s where businesses need to implement FIFO and FEFO techniques.

So, what are FIFO & FEFO techniques?

To put it simply, they’re ways of organizing and prioritizing the good you’re storing.

FIFO stands for First-In-First-Out and is all about making sure your oldest items are sold first.

FEFO stands for First-Expired-First-Out and is based on ensuring you move the products with the soonest expiry dates first. In industries like Hospitality and the Pharmaceutical industry, this is a must if you want to minimize waste and ultimately increase your profit margins.

Carried or held inventory seldom appreciates in value and is far more likely to lose value over time. Changes in style, packaging, and demand can result in slow-moving stock becoming dead stock.

If you’ve spent money on the stock you can’t sell, you’ve essentially lost a large amount of capital that could have been spent far more productively.

6. Fully understand your supply chain

Before the goods and products, you offer your customers reach your warehouse, there are a few other steps along the way.

Your supply chain can be a very detailed process, but one that’s well worth fully understanding.

Source

Understanding exactly how your goods get you, from start to finish, is crucial if you want to ensure truly effective inventory management. Your supply chain is vital when it comes to ensuring you never leave your customers hanging.

Without going into detail, as the conflict between Russia and Ukraine has escalated, if even one cog in the supply chain mechanism is affected, it can affect even businesses that have no direct contact.

Having a clear idea of your product's journey to you can help you plan for or avoid any holdups that may occur. You may not be able to control everything that happens in your supply chain and sometimes hold-ups are unavoidable.

Keeping a discerning eye on all the cogs of your supply chain can ensure the machine that is your business continues to operate as efficiently as possible.

Final Thoughts

Your inventory is your business's key to success. When it’s poorly managed, stored, or neglected, you can experience a drain that’s hard to come back from.

It may seem like that goes without saying, but you’d be surprised how many businesses have lost finances they couldn't afford to without them noticing until it’s too late.

Luckily, if you adhere to these six techniques, you won’t be one of those businesses. Before long, you'll be recovering money you didn't know you were losing, simply by improving your inventory management.

Lead Image