When you have a warehouse full of inventory stock, there is a lot to keep track of to make sure everything gets stored, accounted for and distributed properly. Having a healthy supply of inventory stock helps your business ensure it can meet customer demand. To keep up with demand, this often means you need a large amount of goods piled high in your warehouse.
Unfortunately, if you aren’t able to sell off your inventory stock, the products could decrease in value and your company may experience what is known as inventory risk. There are many variables that make a company vulnerable to inventory risk. Part of your inventory management process could be running smoothly, while other areas could be jeopardising your situation. It’s important to understand inventory risk so you can mitigate any problems and shoot for the best practices in the inventory world.
Let’s look at the different types of inventory risk.
If you have shipments of inventory getting delivered to the warehouse on a regular basis, the timing can create a risk if it’s too early or too late. If a supplier keeps shipping your goods earlier than you anticipated, you might have an excess of inventory and have difficulty storing it in the right location. This means goods can get mixed up in the warehouse and damaged if they aren’t stored properly. It might also mean you run out of space in your warehouse!
On the other hand, if your supplier consistently delivers goods late, you run the risk of a stock-out. If you don’t have stock to fulfil orders, your customers could be dissatisfied or take their business elsewhere.
Here are some tips on how you can manage lead time.
Inventory control aims to keep tabs on your where your inventory is and how it’s being managed. A threat to inventory is when stock gets stolen. Employees know the ins and outs of the warehouse, and sometimes when there is high-value stock around, goods get stolen. Having high-value goods are not only risky when they get damaged, but also because it is tempting for employees. It is also harder to prevent theft in-house, because employees know the systems and security measures in place. However, it’s worth investing in anti-theft measures. You can keep security guards on site and monitor the warehouse and premise with cameras to help decrease this risk.
Inventory shelf life
Most products aren’t made to last forever. They have a limited time that they can sit in a warehouse or on a store shelf. They will expire, go out of fashion, or will become redundant to people.
The simplest notion of shelf life is with food that expires. Fresh bread can only last about a week on the supermarket shelf before it goes stale or mouldy. Clothes also have a shelf life as they are often seasonable and the fashion trends change year on year. The shelf life of garments can also expire depending on how niche the item is designed.
In addition, certain tech items become redundant. The old iPhone chargers don’t charge your new iPhone anymore and headphones with cords are slowly being phased out of devices as well. Make sure you monitor the market and manage the shelf life of inventory.
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.