Controlling Inventory Stock Effectively

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Inventory control can seem like a massive undertaking for a company. It involves a lot of responsibility and coordination to ensure everything relating to inventory is managed properly and efficiently. This includes inventory supply, warehouse storage, product distribution and keeping up-to-date on stock takes for a multitude of different items. Ultimately, inventory control is implemented in order to derive the highest amount of profit from the least amount of inventory investment needed. This has to be optimised without affecting customer satisfaction or disrupting order deliveries.

There are a variety of ways companies and wholesale distributors work towards optimising inventory control to yield efficient results and profits. It’s necessary to have good inventory management strategies in order to control a company’s biggest asset.

Determining Stock Levels

In order to control stock levels, it’s important to know what stock levels you are aiming for. By identifying minimum and maximum amounts needed, future planning can be shaped by these numbers. Decisions need to be made around inventory items at certain levels. For example, the re-order level needs to be determined, so inventory software can automatically re-order supplies when an item is depleted to a certain amount. It’s also necessary to decide the amount of safety stock your inventory needs. Safety stock is in place to mitigate running out of stock, otherwise known as stock outs. Additionally, average inventory levels should be established to maintain orders and be responsive to demand.

Identifying Inventory Turnover Ratio

By utilising an inventory turnover ratio, a company can determine how fast they are going through their inventory over a set period of time. When the ratio is high, this indicates a short shelf-life for certain inventory items. High ratios are generally aligned to higher sales volumes and an increase in profit, when a company operates with a lower profit margin. Inventory software can track inventory turnover and provide data on product trends. Throughout an item’s life cycle, it is inevitable that demand will change. By having up-to-date data from inventory software, it is easier to manage inventory control and track demands to keep products adequately stocked.

Strategic Warehouse Stocking

Undoubtedly, some products will be more popular than others. As a result, popular items will have higher turnover rates than some of the other items you stock. When items are in high demand, they are considered fast moving products. Fast moving inventory needs to be strategically located as close as possible to the shipping, staging and receiving area of a warehouse. This keeps the turnover process as efficient as possible. Eventually, demand will change and once that product experiences a decrease in demand, it should be shifted further back in the warehouse. This makes room for new, high-demand products and keeps inventory control streamlined. This strategic product placement inside the warehouse keeps the workstream optimised and decreases time spent searching for a product.

In order to control inventory stock effectively, it’s necessary to keep information transparent with the aid of inventory software and streamline processes within the warehouse to ensure the day-to-day operations run smoothly when handling inventory.

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Melanie - Unleashed Software
Melanie

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.

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