Inventory management is a key component of small, medium and large businesses. If there is one thing that they all have in common, it is that there is always room for improvement. Getting the right level of inventory can be a delicate balance between ordering too much and having too little on hand. There are a plethora of factors affecting inventory management and we will delve into ways to streamline processes and improve your inventory management.
Accurately Track Inventory
One of the first steps to managing your inventory better is knowing what you have in stock. Whether you have multiple warehouses or just one warehouse, you will see the benefits. You will also reap the benefits if you have physical stores, online stores, or both!
By downloading inventory software, it can make a world of difference in tracking inventory. The inventory software has tools to accurately track your stock levels, identify shortages, mitigate overstocks and provide real-time information across all inventory platforms. By accurately tracking inventory, you will streamline procedures and reduce errors through automation. Electronic scanning systems can provide tracking throughout an inventory item’s entire lifespan.
Focus On Your Needs
A warehouse full of inventory can be a daunting task. Therefore, when you are managing your inventory, you need to identify the items that are the most important and focus on them. It is unrealistic that all items in a warehouse will have the same demand from consumers.
The 80-20 rule is applicable here, where 80% of your profit comes from 20% of your items. Therefore, when looking at an item’s importance, you can rank it into three categories. Category I is the highest selling items, those in the “20%” range, yielding 80% of your profits. Category II is comprised of the next highest selling 30% of items, that generate approximately 10% of your sales. Lastly, Category III will make up half of your items in stock, but only account for 10% of your sales. The focus of your forecasting and maintenance of stock levels should be on Category I. That is your highest priority to manage and it should carry on from there. If you make sure the top items are in stock, you will have a higher likelihood of maintaining customer satisfaction.
Embrace Inventory Management Technology
To stay competitive, you need to be up-to-date with new technology and the benefits it can bring to your company. Cloud-based inventory software is changing the way you manage a business. Not only can it play a large part in accurately tracking your stock, it can aid in the distribution process as well. There is an endless amount of logistics outside of the warehouse, including transportation, distribution and customs regulations that impact goods.
Inventory software can communicate with different platforms throughout the process and keep you aware of the good’s location, stocks from other suppliers and expected delivery times from other stakeholders. Using this inventory software can be a strategic move to stay competitive and ahead.
By taking on board a few of these initiatives, you will see improvements in your inventory management and how your company operates.