Inventory is one of the biggest assets and biggest costs for a business. It allows you to store a wide range of products to meet customer demand, but without proper inventory control, your stock can be a financial drain if it’s mismanaged. You can use inventory control tactics to decrease your overall inventory costs and free up that money to use in new ways around the business.
Since inventory costs you a lot of money, it’s best to be critical of your spending and see where you can reduce or get by with less in certain areas. Here’s a few handy tips on how to cut costs and get a handle on your inventory.
Steer clear of minimum order quantities
The practice of using minimum order quantities (MOQ) are common when suppliers want to sell bulk amounts of stock. Suppliers use this tactic to push a higher amount of stock out the door which reduces their cost of inventory and in turn, increases yours. They will often put a bundle deal together where you buy 400 skateboards and they’ll throw in 20 skateboards for free. Although they are “free” this offer might not be so enticing if you aren’t able to sell off all of this stock.
However, if you still want to take advantage of a good priced bulk buy, but don’t want all the extra inventory, then you can look for slightly unorthodox way to mitigate this. One inventory control tactic is to look for other business owners who might be after some of the same stock. You can combine your money and then split the stock when it arrives. This way you can decrease your inventory costs, but still take advantage of a good price. Negotiation is always an option and you can build relationships with suppliers and see if they will dismiss the MOQ clause.
Get rid of dead stock
Dead stock is inventory stock that has been sitting on your shelves and it’s simply not selling. Holding on to this kind of inventory can be detrimental to overhead costs and the ability to bring in new products or increase amounts of popular inventory stock. Although the initial hard costs of purchasing are now long gone, it is still costing you money to maintain and store. You are also incurring the lost opportunity cost of what new inventory stock could bring for you.
Don’t let dead stock be a burden — look for ways to get rid of it and make room for fresher stock items in your warehouse.
Use online inventory management
Incorporating online inventory management into your warehouse will save you money and time. This system has a ream of benefits and your inventory costs can drastically decrease simply through optimisation. It can track when inventory stock is running low and will trigger a reorder of that specific stock. This way there won’t be an overlap in stock and shelf space will be optimised. It also makes stock taking more efficient and helps with forecasting demand.
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.