Industry-leading inventory control is an achievable goal for every business, at any scale. For most businesses, there are numerous opportunities to improve performance. For retailers, wholesalers and many other businesses, stock is the biggest asset on the balance sheet. Here are five ways to manage that asset better.
Embrace the power of statistics
Every data point is potentially vital business intelligence. A great way to improve inventory efficiency is to move away from arbitrary rules of thumb and to forecast using objective, data-driven formulae.
By taking a near-scientific approach to planning, you can be confident that you are carrying the optimal stock level (and not burning capital on inventory carrying costs or stale stock) and that the business is appropriately managing safety stock and understocking risk. By looking at the key trends, you can also set meaningful priorities for stock control. For example, if 30% of your products make up 90% of your sales volume, then it makes sense to focus the effort on those SKUs. Businesses can also approach the question from another angle – by using data to identify and eliminate slow sellers and obsolete products.
Take a real-time, perpetual approach to inventory control
Having constantly accurate product and sales data provides a crucial competitive edge. Perpetual, real-time inventory allows businesses to hold less safety stock, reduce stock carrying costs and minimize stock shrinkage. Cost capturing and allocation are also improved.
Leave Excel spreadsheets behind
Not so long ago spreadsheets were at the cutting edge of finance and business. For a long time however, they have held stock management back. Spreadsheets simply cannot match recent innovations in stock management software packages.
Excel and other legacy inventory control systems are error-prone (both manual data entry and a reliance on formulae). Because Excel only allows one user at a time, productivity and accountability suffer – this is crucial as a business scales up and grows. Perhaps the biggest drawback of legacy systems is that they do not support real-time, accurate inventory data.
Choose a best in class, cloud-based offering
Software-as-a-Service (SaaS) means subscribing to a software package instead of buying an expensive, one-off license. SaaS inventory management packages are mostly cloud-based and offer some significant benefits. Implementation is generally straightforward and user interfaces are typically very intuitive, improving morale and easing staff reluctance to use the new system. Inventory data and reports are available from anywhere you have internet – on the road, on the factory floor or on overseas business trips.
Embrace mobile technology
Low-margin, high-volume retailers have been equipping sales staff with real-time on the floor stock data for several years. Staff can be more responsive to customer queries and can take ownership over inventory control, continually feeding inventory information to store management and the distribution center. However, mobile devices are not exclusively an opportunity for large retailers. Any business that relies on centralized, paper-based or manual inventory processes can benefit by giving floor staff wider responsibility for 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.