If you are in a retail business, the first thing you have to do is store inventory. However, the important question that arises here is how much should you carry? at the first glimpse, the answer is pretty simple: Enough to meet demand, but not too much that your products sit around blocking up capital.
Maintaining this optimal amount might sound simple but it is way more difficult in reality. If products get moved too fast, you will definitely run out of stock and you might end up in the back-order situation. If products don’t move fast enough then you might’ve bought too much inventory which is surely going to tie up the capital.
There is one more thing, the lead time: If you find yourself in a situation where you need to reorder, you should reorder before you run out of stock, do not wait for the last item leaves your shelf. In inventory management, tracking and saving stock for orders is extremely important for increasing sales and improving consumer loyalty. If you are not capable to give your clients specific item availability, status, quick delivery, and store pickup then you’ll lose the sale and the relationship with your consumers.
To top it all off, your optimal inventory is something of a moving target. What was a well-known product a year ago probably won’t be this year or a new promotion might make slow-moving products suddenly fly off the shelves.
How Do You Fine-Tune Your Business?
Given all these problems, how are you going to you improvise your inventory? Worry not because we’ve assembled 3 ways you can improve your inventory management whether you have a small business or large.
Steps # 1 – Fight the Temptation to Overstock
Resist the temptation to overstock. Holding too much stock not only tie up capital, but it also concerns storage capacity and the related storage fees for businesses holding more inventory than is actually needed.
Let’s take the example of a party you are hosting at your house for 40 people. If you are a good host, you’ll make sure that there are enough food and drink for everyone.
Okay now, let’s begin by calculating the number of drinks you are going to need. Some people drink water and some prefer juices so if you take the average of 3 glasses of juice per person, you’ll end up overstocking and that would be a nightmare for you because you probably don’t have enough capacity in your fridge to store 120 boxes of juice and guess what, that’s not the only problem, another problem is not everyone prefers juice, there will be I’ll-just-have-water people which makes the situation even worse for you because now there will be so many “leftovers” too.
However, in the case of business, the fridge that you manage is a big warehouse with too expensive rent and here overstocking is way more complicated to solve and it usually equates to losses.
Solution: Optimize Your Inventory
Reports and past records can assist you to analyze past stock levels. Here you’d need the best inventory management software Wrkmash, where you can manage to track and analyze every product in your inventory. By doing this, you can optimize how much stock you keep on hand so you’ll be able to reduce the costs of storing too much inventory. This will also lower shipping costs and the amount of out-of-date products that your company holds.
Steps # 2 – Measure Item Velocity
Your inventory management is so crucial to your company’s success. There are some questions that require looking at your sales data over a period of time.
- Which product moves slowly, which one moves quickly?
- Which can benefit from forward staging?
- Is it really important to know which items need to be reordered on a daily basis?
- How can you improve that process?
Solution: Identify Low and High Performing Products
It is possible to focus too much on high inventory velocity when you keep a little amount of stock on hand, but what if your inventory begins to expand? when you start to realize that things are getting out of hand and you are not able to control it that’s where you need an inventory management system to finetune your inventory. The best thing about Wrkmash is that it will not only keep count of products but also provide actionable business intelligence. Wrkmash can identify low and high performing products and it also notifies to reorder when inventory is low.
Steps # 3 – Hunt For Trends
Demand for an inventory can change from time to time, it comes and goes with trends, seasons, or new releases of products. Looking at historical order data can help you a lot to build a model that can perfectly predict these trends and variations. However, it is quite impossible to look when the order data is big, you can’t perform it manually and if somehow you manage to perform it manually then you would surely end up spending too much extra time on it.
Without an effective inventory control method, the supply chain suffers. You won’t be able to meet customers’ needs properly and ultimately your business’s bottom line will reflect these flaws.
Solution: Use Inventory Management Software
If you want to stay competitive then you surely need the right tools to build a model that can predict those variations. Excel spreadsheets are highly inclined to data loss and error plus they do not provide the tools you need. In the market and the rise of e-commerce, there is more emphasis on streamlining inventory processes.
By using inventory management software, you can ensure you have accurate results because these management systems are designed to manage your inventory. They are efficient enough to improve inventory control, visibility which can help ensure that less time is consumed on data hygiene, and more spent actually getting accurate results using your data.
To sum up, technology is certainly a significant tool when doing such improvising. By choosing the right inventory management software you can improve the accuracy of your inventory control method.
Wrkmash is a cloud-based software system that is designed to meet the needs of your business and to give you better results. It controls your costs, allows you to track every product in and out so now you can never run out of stock!
Build up your business with Wrkmash and click here to start your 14-day free trial.