Inventory management means deploying a comprehensive system that minimizes errors and optimizes the shipping and receiving procedures. In the long run, this will make up for a drastic reduction in expenditures while increasing cash flow. Unfortunately, despite the obvious significance, several companies do not stay on top of inventory management. This is especially true for small businesses.
With that in mind, we have put together some proven inventory management strategies for small businesses:
- Track Low-Turn Stocks
The term “low-turn stock” refers to products that have not been moved from a retailer’s warehouse in the past six to twelve months. As soon as you have spotted low-turn stock, try to get rid of it. But it will take some ingenuity on your part to move these items off the shelves.
Offering any sort of sale or discount is a tried and true method of doing just that. You may also think about remarketing your products to draw in more buyers. In that case, taking fresh pictures could be a viable option. Updating your product images to the most recent, high-quality versions can do wonders.
- Avoid Storing Excessive Inventory
Many companies spend a fair proportion of their resources on stockpiling. Indeed, bulk purchases might enable you to get better deals. However, this reduces your immediate access to funds until the stock is sold.
As an entrepreneur, you must understand that product prices extend past their purchasing costs. For example, your warehousing or storage costs could balloon if the stock needs special conditions like temperature control and security fencing. And to make matters worst, if you do not sell the items when you should, they can be marked down and discounted.
The best way to avoid this scenario is to determine the quantity and timing of your inventory needs. Examining previous sales is the surefire approach to get a sense of how many products will be moving off the shelves during a specific duration. Look at the data monthly to see if any patterns are developing. Keep an eye out for both month-end peaks and less obvious trends. You should study your rivals before launching your business if you are a startup.
- Install An Inventory Management Software
For contemporary businesses, inventory management software offers a slew of advantages. For starters, it facilitates the automatic monitoring and ordering of products for businesses in response to customer demand. That is to say; you will not need to keep a constant manual check on the stock levels. In addition, inventory management software provides you with analytics that allows you to evaluate the demand and supply of various products. This data can lead to more profitable decisions.
That being said, it is worth mentioning that not all inventory management software works similarly. Instead, they vary based on numerous underlying variables. But if you narrow down your attention to the following criteria, you will be able to cherry-pick the best software for your business:
- Requirements: Before investing in inventory management software, you should carefully consider your requirements. Find out what issues you are having with inventory management and what solutions will work best for you.
- Usability: We urge you to seriously consider usability as you weigh your options. If your employees need a lot of time to master learning the software, you are better off staying away from it. Always go with software that is simple to use. So much so that even employees who lack technological expertise should not have a hard time getting their heads around it.
- Integration: Some of this software comes pre-configured with particular functions, while others could be tweaked to fit the unique requirements of your business as it grows. Keeping the long-term vision in mind, you should ensure the program integrates with current and future tools you may install to grow your company.
- Maintain A Positive Working Relationship With Vendors
Without the help of suppliers, your business will fail miserably. Getting in touch with your suppliers is often necessary, and a speedy response from them can help you avoid a range of potential problems. So it is crucial to fortify ties with your suppliers. Do not assume you have to do anything out of the ordinary in this regard. Simply sticking to these basic measures will guarantee a long-lasting relationship with your suppliers:
- Make timely payments: Your payment policies can reveal whether or not your connection with your suppliers is healthy. When you pay on time, or even early, you show your suppliers that you value them as associates and earn their trust. Furthermore, you will most likely move up their list if an emergency shortage occurs with a product you rely on. Besides, it will also put you in a superior bargaining position.
- Communicate frequently: Communication improves understanding, and a unified understanding helps prevent conflict and confusion. If you want to maintain good relationships with your suppliers, it is important to talk to them about more than just business.
- Help them grow: A quick path to a supplier’s heart is to help them get more business. One way to do that is to serve as a reference for them. Apart from that, you may also act as a matchmaker. For example, if you know a business that could get certain products from one of your suppliers, try connecting them.
- Conduct Stock Audits
Stock audits are critical to efficient inventory management. Many companies find that doing a full audit once a year is the most convenient way to determine if their stock levels correspond to their computerized records. However, some companies engage in stock audits more frequently. In either case, conducting a stock audit is the most reliable technique to identify potentially costly problems such as theft by employees and incorrect labeling.
Maintaining orderly stock levels is essential to a company’s bottom line. This is especially true for smaller companies because they often lack the financial wherewithal to start over after a costly blunder. So believe that following the steps outlined in this post will suffice to keep you on top of inventory management.