You’ve had your Christmas party, you’ve shipped your final orders for the holiday season and you’re enjoying your time off. But it’s never too early to start thinking about the following year – and there’s plenty to think about when it comes to making the year easier on yourself and your employees.
One of the things to consider is how your business is handling its inventory management. What’s happening in your warehouse can have a massive impact on how effectively and efficiently your business is running. If mistakes are happening in your warehouse, whether it’s overstocking, understocking, misplacing orders or mistakes in the recording of data, your business might struggle to get back on track – and you might lose valuable customers in the process.
Heading into the new year, consider some of these handy tips to make surefi you’ve got your inventory under control.
Stock taking is an important part of making sure that your business is running smoothly; it’s also an important part of meeting your financial and tax reporting obligations for the year. Stock taking can become confusing if you’re tracking things like sold goods and damaged goods in different systems. These goods are still part of your inventory and still need to be counted as part of the stock taking process, but if you’ve recorded them on another inventory management database then you might miss them when you’re doing your stocktake. It’s just like when you lose your keys: the more places you have to look, the greater the frustration.
If your business is experiencing these issues, consider moving to a single system of record before your annual stocktake. That way, you’ll be able to make sure that you’re always on top of what you’ve got in your warehouse.
Analysing your inventory
There are a number of ways to analyse the comings and goings of your inventory over the last year. Consider valuation processes like Weighted Average Costing. The simplicity of this method means that minimal maintenance is required.
KPIs help you gauge how your inventory is performing compared with how you want your inventory to perform. There are three different classes of inventory KPI: sales (e.g. the stock to sales ratio); receiving (e.g. how long it takes to process incoming inventory); and operational (e.g. the rate of return of shipped items or the percentage of your expenditure spent on managing your inventory). KPIs help you assess the parts of your inventory management that are working well and the parts that aren’t, giving you actionable ways to improve your inventory management for you and your employees.
Avoiding overstocking and understocking
Whether you’ve ordered too much and are struggling for warehouse space or you’ve ordered too little and are struggling to meet customer demand, you’re experiencing the consequences of poor inventory management. If this has been a consistent problem during your year, consider a couple of useful solutions.
The first solution is to look at your inventory management software and, perhaps, upgrade. If you’re still on Excel, you might be experiencing data entry errors and chain of command issues that mean that your employees aren’t always making decisions about ordering or not ordering stock with an accurate and up-to-date idea of how much stock you already have in your inventory. Upgrading to a cloud-based solution will make it easier to pinpoint data entry errors and keep your inventory data consistent across different devices and different sites.
Also look at establishing minimum product levels for your goods. If you need to keep certain products stocked at a certain level, analyse your inventory to make sure that you know when those goods are selling fast, when they’re selling slow, and how low you can let your stock volume get before you have to order more goods. Setting up an automatic reorder point will streamline your ordering processes and take away some of the stress of monitoring your inventory.
Making things easier on the floor
Inventory management is time-consuming and can often be physically demanding for your employees in the warehouse. Make it easier for them to locate goods with things like trackers and barcode scanners – small purchases in the long run that can have a massive positive impact on your efficiency and profitability.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.