In most businesses but particularly in retail, having the right amount of stock on hand that is in optimum condition and within the expiry date, is the key to instigating sales and creating a reliable customer experience.
To do this is no easy feat and there are often a lot of managerial practices that must go on in the background to ensure the smooth running of things in the foreground. This management of inventory is essential to the slick running of your business and the maximizing of profits. Delve in with us as we explore some factors that contribute to inventory management.
Particular purchasing plans for particular products
Well, that is a mouthful, but it describes an important aspect of inventory management. Knowing the product inside out and creating a purchasing plan specific to it is vital to ensuring it is always in control. Shelf-life, manufacturing country and transportation, lead times and sales trends are just a few things that need to be considered when deciding quantities and optimum timing for ordering a product.
Inventory Management and Warehousing
It may seem too simple to mention, but having a good warehousing system is essential to successful inventory management. It is one thing to order the right amount of product, but if it is not stored correctly and cannot be easily located when sold to a customer, then the whole process up until that point is in vain. Having a well-thought out floor plan of where to store different types of stock will help to minimize futile time spent searching items when needed.
Always having ‘eyes’ on your inventory is a new aspect of inventory management that is very useful indeed. Numbers or barcodes can be assigned to your different stock items enabling them to be tracked with a software system, right the way through the manufacturing process or warehouse and into the customer’s hands. This is a fantastic feature for knowing exactly where product is, but also for accurately forecasting sales trends and customer demand using real data so that the customer’s wishes can perpetually be met.
Every company wants to sell product for the most they possibly can, thereby maximizing profits. One way of doing this is taking advantage of bulk-buys or purchasing incentives from your suppliers. This can be a large opportunity for cost-savings however must be approached with trepidation. If too much stock is ordered for the forecasted demand, even if very cheap, then instead the company will end up paying higher fees in storage and insurance costs, and the stock may expire before being sold. Another side of this is if the company has an excess of stock and so runs a sale, only to find they sell out and end up with dissatisfied customers. Analysis of stock using a software system is essential to have useful and accurate information when considering money-saving opportunities.
It is difficult to predict unforeseen adverse circumstances that may occur in business and that drastically affect your ability to provide the product or service to your customer in a timely manner. These can be anything from ash clouds affecting cargo flights to fires at your supplier’s manufacturing plant resulting in the obliteration of stock. Unfortunately, if businesses are known to be reliable, then they do not have the luxury of simply apologizing to the customer and hoping to maintain their custom. Therefore, it is essential to have certain reserves of safety stock on hand or back-up suppliers as part of a contingency plan to ensure customer demand can always be met.
Good supplier relationships
Selecting reliable suppliers who you can trust and who intrinsically understand your product, your business and your ordering practices will help to avoid issues later. Do not underestimate the importance and time needed to select and strengthen these bonds as, when all is said and done, you need to be able to rely on your suppliers to have your company’s best interests at heart. This may be in terms of fulfilling orders as best as they can even in unforeseen adverse circumstances or being open and honest in communication. There is nothing worse than being let down in the 11th hour by a supplier and having to face your customers and risk loss of business for events out of your control.
Want to learn more? Read our Inventory Management Guide