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INVENTORY MANAGEMENT: THE RIGHT WAY
Inventory (also called stocks) can simply be defined as the goods and materials held by a business with the intention of being resold or utilized. Raw materials, cycle inventory, in-transit goods and MRO goods are all examples of inventory.
Ordering, stocking, and utilizing a company’s resources or goods are all part of inventory management. Prioritizing your inventory allows you to see what you need to purchase or create more regularly in order to meet your customers’ demands on a consistent basis.
Proper inventory management, though it might not be very exciting, is an important aspect of running a business. It is a critical component of a company’s success, yet many small firms don’t handle their merchandise well.
Some companies don’t have enough inventories to fulfill client demands because they can’t supply enough items on hand. This frequently pushes people away, sometimes to a competitor’s store, and other times for good. Sales might be lost due to out-of-stock alerts if you don’t have good inventory management techniques.
In such occasions, good inventory management strategies can help you strike a balance between building up your inventory and maintaining a tight operating budget.That’s why in this article, we’ll show you 7 easy-to-follow tips for proper inventory management.
7 TIPS FOR MANAGING YOUR INVENTOR
1.Prioritize your Inventory
Inventory prioritization may help you identify which goods need to be ordered more frequently and in larger quantities, as well as those items that are critical to your organization but may be more expensive and take longer to move.
Most experts recommend dividing your inventory into three categories: A, B, and C. Items in the A category are more expensive, but you only need a few of them. Merchandise falling into the C category is less expensive but has a shorter shelf life. The B category has products that fall somewhere in the middle: they’re reasonably priced, but they move out the door at a slower pace than C items.2.
2. Keep Track of your Sales
While this may seem obvious, it is quite peculiar. It’s not just about totaling up sales at the end of the day. You should know what you sold and how many every day, and you should update your inventory totals.
In addition to that, you’ll have to examine the information you’ve gathered. Do you have a sense of when particular products are selling better or worse? Is it something that happens every year? On what day of the week do you offer various products? Is it true that some goods tend to sell in groups?
To keep your inventory under control, it’s critical to understand not only your sales figures but also the overall picture of how products sell.
3. Invest in Inventory Management Systems
This tip is for people with much bigger businesses. A problem will arise as your company expands and you may either have to spend more time managing inventory or risk having an out-of-control stock situation. All of these responsibilities are simplified with the aid of effective inventory management software.
That said, you should know what you need before choosing a software solution, and make sure it has the analytics your company needs and is simple to use.
4. Analyze the Performance of your Supplier
You need to make sure that your supplier is always up to the task. Inventory issues might be caused by an unreliable supplier. Take action against a supplier that is chronically late with deliveries or consistently under-delivers on orders. If there is a delivery problem, talk about it with your supplier to find out what is wrong and fix it as soon as possible.
Also, it’s a good idea to have backup plans in place in case your original supplier can no longer deliver to you on time.
5. Plan for emergencies
No matter how prepared you think you are, there will always come a time when there will be an emergency. It could be that your supplier is running late, your goods get damaged, or you just don’t have enough goods to satisfy your customers. While your goal is to keep inventory levels at the right levels, there are going to be times when demand outstrips supply.
You should always prepare for the unexpected. Line up extra suppliers now and budget for rush shipping charges, if necessary, to accommodate customers.
6. Perform Regular Audits on your Inventory
Auditing your inventory thoroughly is very important because you need to make sure that you have as many products as you believe you have. An annual comprehensive count is carried out by many businesses, while others do spot inspections on their most popular goods on a monthly, weekly, or even daily basis. No matter how often you do it, you should always make sure regular inventory audits should be performed to ensure that records correspond to actual inventories.
It is important to conduct inventory audits on a regular basis to improve inventory management efficiency. If you don’t conduct regular audits, it could affect your business in future.
7. Consistency is key when it comes to how you receive inventory
Though processing incoming inventory may seem basic, it is important to ensure that there is a level of consistency in the workplace. Do you have a consistent procedure that everyone follows, or do each of your employees who receives and processes new stock do it differently?
Small differences in the way new stock is taken in might affect your records at the end of the month or year, and you would be left confused at why your figures don’t match your purchase orders.
Ensure that all employees that receive merchandise do so in the same manner and that all boxes are confirmed, received and unloaded together, correctly tallied and checked for correctness.
Effective inventory management could be just the thing your business needs in order to get to the next level of success. Your cash flow will improve as well as your ability to fulfill client orders by enhancing your inventory management procedures.
So, if you want your business to improve your inventory management, these tips can help you get started on that.