Are You Proactively or Reactively Controlling Your Inventory Stock?

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As a business owner, it’s easy to feel like you’re being pulled in all different directions across your business. It’s an around-the-clock job and there are always decisions that need to be made. Inventory stock is one of those fundamental components that a business owner needs to ensure is getting looked after. However, the phrase ‘getting looked after’ can be somewhat subjective. Some business owners might look after their inventory in a very reactive manner, while others take more of a proactive approach. Which strategy are you using to control your inventory stock?

Reactive strategies

Reactive strategies are implemented to respond to a problem; they create need-based solutions. Reactive strategies are initiated when something goes wrong and there needs to be a call to action. This is more of a troubleshooting approach, rather than trying to prevent problems from happening in the first place.

Reactive strategies spend little time focused on planning for anticipated events. For example, there could be a stock-out of beach balls or a surge in demand for heaters, but a reactive approach doesn’t prepare their warehouse for every situation. Rather, when something happens, they deal with the issue currently at hand — they source more beach balls or find a way to acquire more heaters. This means they spend less time on preparing for hypothetical situations and more time resolving the active issue.

Proactive strategies

When you have a proactive approach to managing your inventory stock, you are focused on being prepared to manage an array of inventory issues and opportunities. You plan your warehouse stocks with anticipation of what could happen. This could be an upcoming seasonal trend or a new product on the cusp of popularity. This advance planning may lead you to bulking-out your inventory stock. Proactive strategies often include this kind of safety stock. This keeps you prepared for delayed shipments. Delays can arise for a variety of reasons including inclement weather events or customs problems.

Proactive strategies are a great way to reduce stress and panic in crisis management situations. When the stock is moving quickly off the shelves, chances are you’re prepared with safety stock. This buffer not only ensures you’ll have enough goods, but it also allows for energy and creative thinking to be focused towards other aspects of the business.

With a proactive approach, you may find that customers are more satisfied. You are more likely to have items in stock and you’re able to respond faster with your proactive plan. You can meet customer demand and appease your shopper’s needs.

Which one should I use?

Both approaches can work for a company. A fully reactive or fully proactive approach isn’t likely to work all of the time as there are pros and cons to both strategies and each one is appropriate in different situations.

Look at how you’re spending your time. If you’re stuck in crisis management mode all the time, perhaps it’s time to incorporate some proactive policies. Try it on a few different inventory items and see what works. Also, try a hybrid of the two strategies to make your inventory management system work for you.

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Melanie - Unleashed Software

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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