Learning the best practices for inventory management is a priceless investment for any business. Inventory is one of the biggest assets for a company as there is a lot of capital investment that goes into inventory. Of course, inventory leads to product sales and then revenue for the company, however, the equation is not that simple.
Inventory requires a significant amount of cash to cover overhead costs such are warehouse rent and maintenance and proper storage within the warehouse. Some items are perishable and need to be in climate controlled conditions too. Other products are seasonal and their shelf life needs to be shifted quickly in and out of the warehouse.
Inventory management best practices can provide support to guide your business in the right direction. It can help streamline warehouse processes and provide a better foundation for managing your biggest asset.
Find the inventory management system that suits your needs
There are two main types of inventory flow. Depending on your business model and what your needs are, the type of system will vary. The continuous review system places orders for new inventory stock in standardised amounts. With a standardised order amount, this means you need to keep an eye on inventory levels in the warehouse. Once the inventory level on a certain item goes below a specified level then the stock needs to be re-ordered.
The other option is implementing a periodic review. The system operates by re-ordering stock at a set calendar date in each period. When the period is over, it is up to the warehouse to determine how much more stock needs to be re-ordered. This will put the stock levels back to a healthy equilibrium. However, this means there is no set amount to re-order, as seen in the continuous review system.
Implement online inventory management
By using an online inventory management system, the business will be provided with real-time data about what is going on in the warehouse. It tracks an immense amount of data and it can be communicated across the business with ease. It can be used to analyse sales history, buying patterns and customer demands. It is a helpful tool in forecasting as well. Online inventory management is a much more efficient option than spread sheets or pen and paper record keeping. Big or small, online inventory management allows for stock tracking, information sharing, and it is a very scalable solution that caters for growth.
Utilise standardised quality control measures
The quality of a product should never be comprised. A standardised process to implement quality control is imperative to keep customers satisfied with the product. If there is inconsistency or poor quality in your product, there is risk of losing current and potential customers.
Employees in the warehouse need to be accountable for assessing the product when they receive it in the warehouse and before it heads out to the customer. They should be trained to look for damage. This can include tears, scratches, broken seals, holes or leaks. Other key quality control measures include ensuring the product’s colours, sizes and correct styles are placed in the appropriate box with the right label. If a customer received a pair of shoes and one shoe was a size 8 and the other was a size 9, this would be poor quality control. If employees have a list of what to look for then they can efficiently check for quality.
These are just a few of the best practices for inventory management. However, by implementing these practices, your business with operate in a more effective manner.