Top tips for inventory management


Top tips for inventory management

inventory management

Ok, so keeping a robust inventory for your business isn’t the most riveting subject in the world of business. But it should be. Unless you have a precise monitor on your stock, your business could well just collapse like a pack of cards. You are unable to analyse past sales in order to streamline on-going production, you are unable to determine present stock to take advantage of current prospective orders, and you cannot buy safely and wisely for the future.

So what are the essential cornerstones of a good inventory system?

First of all, get to know your stock like you should know your prospective customers. Without a clear idea as to who is going to buy your product, any marketing you do is going to be flying in the wind. In the same way, if you do not keep track of the real character of your stock, you are restricted as to how you can provide in the now, analyse past sales and provide enough stock to meet demand.

Stock’s stock isn’t it?

Not necessarily. You can break it down into four specific groups:

1. A simple Item – this is a product that comes as it is. There is no packaging or assembly and it comes just in the one variety.

2. An assembly product. This is a product which is made up from different parts within the warehouse and assembled before it is shipped or distributed. Here it can be seen that the various parts are all dependant on each other and would need specific data to ensure the complete product is in stock.

3. Is your product part of a family? Yes, all nice and cosy, but what this really means is your product may have various sizes or colours for instance. So, with this type of product you need to maximise stock vertically rather than horizontally and have a knowledge of past orders, so stocks of certain varieties can be bought in efficiently.

4. Do you send more than one product out to a distributor? This is called a bundle and also needs to be factored into your data, so you can analyse past orders appropriately.

Sku’s and barcodes

A SKU number will help you identify each product in your warehouse, so you can keep a track of how much of each product you have in stock, how much you have sold and how much you need to buy for the future. A barcode is more commonly used with third-party sellers and re-sellers. Sellers will use barcodes to keep track of their own in-house stock. Barcodes must be bought from the governing body – the GSI – or an approved reseller.

Your inventory is fundamental to your business road

Once you have a robust system in place you can track which products are going where, which products are selling really fast and those products which are hanging around on the shelves or in your warehouse a little bit too long. But don’t forget, you also need to have a clear understanding of what marketing measures have been used on a specific product, the marketing budget, and competition involved before writing a specific product off as a failure.

As well as that, the products overall shelf-life, overall life expectancy and purchase price are essential when considering how well it is selling and how many you will need to meet demand in the future. For instance, if your product is selling like hot cakes it could well be because that’s exactly what they are: unless they are bought when they hit the shelves – they are out of date. Some products will be affected by fashion and “use by” dates, while others will have a long life expectancy (such as an oven) and so are not bought in such large quantities or so often. If your product is in the later class, factor this information in so you can fairly put it into context in terms of its apparent popularity. This, in turn, will lead informed choices for replenishing stock.

Work the system

You need a system that is easy for employees to work with. A system that flows, provides stock data, also bills the customer and gets the product out there on time. A robust system should therefore

However good the system is you need to put regular checks in place to ensure nothing is going awry or that the whole thing isn’t quite doing what you would expect it to. A monthly or at least a quarterly Internal audit will ensure that the everything is current and working correctly. A more streamlined daily audit which looks at orders for each day can help you pick up any glitches in the procedure and ensure your customer has the best possible experience. In turn, this can only lead to enhancing orders in the future.

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