To help make sure that you are on road to achieve success, it is essential to properly assess your business on a regular basis. For this reason, inventory management is one of the most vital parts of your business. Concerns for the business such as how it is panning out with the business’ inventory management, if there are enough products available for distribution, how much money you are earning and how much you are losing due to excess stocks are quite common in a business.
This article will be discussing about the fundamental inventory management strategies and what one should look for ininventory management software.
Inventory management is the key component of supply chain management that seeks at having the right products at the right time and in the right quantity for sale. Businesses will be able to reduce the costs of carrying excess stock while maximizing sales when inventory management is done effectively. Good inventory management will help you manage your inventory in real time when streamlining the process. You can have the right products with just the right quantity on hand by efficiently managing your inventory and at the same time prevent products from being out of stock and your funds from being tied due to an excess in stock. You can also make sure that your goods are sold in time to prevent spoilage or obsolescence, or that too much money will not be spent on stock that takes up space in a warehouse or storage facility.
Key components of good inventory management software
Good inventory management software should be able to provide the following:
- Help in reducing the costs, improve the cash flow and boost the business.
- Ability to keep track of inventory in real time.
- Help in forecasting the demand.
- Prevent product shortages.
- Prevent stock excess.
- Capable of allowing using any device for easy inventory analysis.
- Accessible right from retail point-of-sale.
- Optimization of warehouse organization and employee’s precious time.
- Provide quick and efficient bar code scanning.
- Allow multilocation management which can track and manage inventory across multiple locations or warehouses.
Techniques and best practices for a business’ inventory management
- Fine tune your projections. It is vital to have precise forecasts. Your expected sales estimates should always be predicated on factors such as historical revenue, market trends, anticipated growth and economy, promotions, marketing campaigns, etc.
- Use the First In, First Out (FIFO) method. Products should be sold in the very same sequential order as they were bought or obtained. This is particularly crucial for goods such as food, flowers, and makeup which are perishable. For instance, a restaurant owner must be aware of the products behind the fridge and use FIFO methods to optimize the restaurant inventory. It can also be a smart idea to use for non-perishable goods since products that are sitting around for too long may become damaged, out-dated or otherwise unsellable. In a storage room or warehouse, the best way to apply FIFO is to add new products from the back such that the old products will be on the front.
- Identify stock with low-turn. If you have excess inventory that in the last six to twelve months has not yet sold at all, it is presumably the best time to stop stocking that product. You could also consider alternative methods to somehow dispose of that item — such as a special offer or sale — because excess stock uses up your space as well as capital.
- Audit and manage your stock. Even if you are already using good inventory management software, you still have to tally your inventory on a regular basis to ensure that what you have in stock matches with what you believe you have. Businesses use various strategies, such as an annual or year-end physical inventory that counts each and every item and continual spot checking, that can be most advantageous for goods that sells fast or those that have stocking issues.
- Use inventory management software that is cloud-based. Stick to software with real-time sales analysis. It would be best if you use software that could connect directly to your point of sale so that every time you make a sale, your stock levels are automatically adjusted. Receiving emails for your daily stock alert is also beneficial so that you always know which products are low or out of stock so that you can purchase more in time.
- Track the amount of your stock at all times. Have a reliable system in place to track and manage you stock levels, giving priority to the most expensive goods. By doing most of the heavy work for you, an effective software will save you time and money.
- Minimize repair times for facilities. Necessary machinery is not always in working order, so managing these assets is important. A damaged machine can be expensive. Monitoring your equipment and its components is critical to understanding its life cycle, so that you can be ready before problems even arise.
- Quality control. It’s important to make sure all your products look nice and work well, regardless of your specialty. This could be as simple as having employees perform a quick check during stock inspections that comprises a list of stocks with signs of damage and appropriate item branding.
- Employ a stock controller. Stock control is often used to indicate how much supply you have at a particular time and pertains to all products from raw to finished goods. You may need one person who would be responsible for it if you have a great deal of inventory. A stock controller will process all purchase orders, accept deliveries and ensures that everything that comes in is consistent with what has been ordered.
- Drop shipping. If your business implements drop shipping, you can sell your products without managing the inventory yourself. When a consumer purchase from your store, a wholesaler or supplier is the one who is responsible for carrying the inventory and the shipment of the products.