Inventory Management involves overseeing and handling all the raw materials or stocks in your warehouse or across multiple storage locations you own. Its function ranges from acquiring your products to tracking them until they are sold.
It is a crucial aspect of your business because it increases your revenue, optimizes resources, reduces unnecessary costs, and most importantly–guarantees consistency and on-time availability of your products.
Effective Inventory Management
Maintaining control over your inventory directly affects your financials, plans, and supply chain by giving you accurate insights into keeping a healthy amount of stock.
However, factors such as data errors, inventory shrinkage, theft, expiration, and the risks that come with them are the top challenges for businesses until now–especially those unequipped to handle the matter at hand.
This blog will provide essential tips to help you achieve effective inventory management and gain a competitive edge for your business to thrive in a dynamic industry landscape, ultimately driving positive customer experience, services, and sales.
1. Know Your Priorities
Try labeling your inventory into A, B, and C.
‘A’ could be expensive items that need few stocks. ‘C’ is lower-cost items that sell quickly. And, ‘B’ could be products in between that cost and sells moderately. Categorizing your inventory in such a way helps you understand your priorities and what you need.
2. Practice FIFO
Which means, First-In-First-Out. Stocks that came into your warehouse or stores first should be sold or used. It would be ideal to place them in front of shelves or on top of your storage. In that way, you’ll avoid product spoilage or selling older stocks.
3. Track Product Information and Sales
Records of product information such as batch numbers, SKUs, suppliers, origin, and each item cost are vital to understanding your sales and keeping your inventory under control. It allows you to determine potential sales patterns, track pricing changes due to scarcity or seasonality, and improve strategies to maintain the right amount of supply.
4. Audit Your Inventory
Watch in and out transactions diligently to maintain inventory accuracy and spot the cause of shrinkage.
Ensure that you always have the right amount of stock at the right time and achieve smooth operations by tracking what products you have on hand. Once discrepancies are found, check for errors and conduct a recounting of stocks. You may also look for misplaced products or ones mistaken for another item due to similar packaging.
5. Evaluate Supplier Performance
Observing the performance of your suppliers is critical to your whole evaluation process. Do they deliver on time, or are they frequently short on stocks? Learning which areas to improve and discussing such issues with your suppliers secure a competitive edge and ensure a well-functioning supply chain.
6. The 80/20 Rule
Also known as the Pareto Principle. Apply it to sales and inventory management then it would mean that 80% of your profits come from 20% of your products. Keeping that in mind, monitoring your items’ sales lifecycle and measuring how many you sell in a week or a month is vital to managing those profitable products effectively.
7. Rationalize How You Receive Stock
Prepare a standard process on how your staff should receive incoming inventory and make sure that everybody follows it. Ensure that boxes are verified, accepted, and unpacked together. Count and have them checked for accuracy to avoid errors in your purchases.
8. Invest In A Good Inventory Management System
Inventory management software makes all tasks easier. Especially a system that can help you access your data on the go, update, and access real-time data through your phones, tablets, laptops, or desktops.
Prevent stockouts, manage inventory from multiple locations, and ensure accurate record-keeping with the help of inventory solutions such as Zayls. Enabling you to expand your product lineup and grow your business with effective inventory management.
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