Inventory stock can earn you money or cost you money depending on how you manage it. If your inventory stock is managed properly, it will allow you to move products quickly and efficiently, earning you money faster. However, if you have shelves of dead inventory stock taking up space throughout your warehouse and other obstacles keeping you from optimal performance, it can negatively impact on your financials.
Inventory management can provide options to make your warehouse run in the best way possible. When a warehouse operates smoothly, suppliers, staff, customers and the company all win. When deliveries come on time, quantities are correct and shipping is streamlined, a company will experience a domino effect of benefits.
The benefits of effective inventory management will save you time and money. Check out a few of the following tactics for leveraging inventory management strategies to save you money.
Get rid of dead stock
Are there items on your shelves that are stagnant and becoming obsolete? If there isn’t customer demand for specific stock items, it’s time to think about getting rid of them. If stock has been there for more than 12 months, it’s a sign that it’s unlikely to move. This can happen for a variety of reasons: seasonal changes, newer popular items come into the market, or shifts in customer demands can all lead to dead stock.
Use inventory management to track the lifecycle of the product. Analyse demand patterns and use this to forecast stock amounts. With better forecasting, you can reduce the amount of obsolete inventory you have lying around throughout the year. If you’re stuck with obsolete inventory, here are some ways to get rid of it. Initially, it may seem like a financial loss for the short-term, but in the long run, it will pay off. Idle inventory stock takes up working capital and precious storage space.
Increase communication with suppliers
Good supplier relationships are one of the fundamental components of successful inventory management. If you can build rapport with your suppliers, you will have a better chance of negotiating your minimum order quantities. If big, bulky monthly orders aren’t working for you, discuss reducing the minimum order quantity with the supplier. This way you can have smaller orders that are shipping more frequently. This helps you keep inventory levels lower, saving you money and still responding to customer demand.
Smaller, more frequent orders will also allow you to be more responsive to changes in demand. You’ll be less likely to be stuck with oversized order than turn into dead stock. Keep in communication with your suppliers and build relationships to find ordering solutions that work for both parties and save you money.
Take frequent audits
Auditing can be a powerful tool to do checks and balances on your inventory management software. A physical inventory stocktake is recommended at least once a year. This can support your accounting procedures at the end of the year and income tax payments. If you identify any discrepancies, it will save you money on any mistakes from the software.