Simple tips on how to manage inventory successfully
How to manage inventory forecasting
Whether you are the owner of a small local business or a large multi-national corporation, figuring out how to keep up with inventory demand fluctuations can be a challenge. An incredibly easy way of losing customers, and a good reputation, is to be unable to fulfill an order due to unavailable stock.
To counteract this, it can be tempting to over order and tie-up too much capital in large quantities of inventory – that you have no guarantee will be required. In addition to the initial purchase cost, facilities and storage costs also need to be taken into consideration.
There is also a risk that your stock will depreciate in price while you are waiting to sell it – or a new and improved product will be launched, leaving you stuck with excessive stock that is now obsolete.
Using your past historical sales data is a handy way of obtaining some fairly accurate figures on the typical sales trends seen in your business. As well as looking at monthly trends, many businesses may also see seasonal trends. Being aware of your sales trends means you can adjust your stock orders accordingly to try and limit wastage, or the risk of under-ordering.
How to manage inventory tracking
Learning how to keep track of your inventory, and implementing an accurate system, will ensure that stock counts are correct and any errors identified quickly. Once you have carried out some sales forecasting, you need to ensure you then have the stock to fulfill the expected orders. You need to ensure processes are in place at all stages of the cycle to avoid miscounts. It is also a good idea to account for the risk of stock pilfering or having to dispose of any damaged items.
Technology can be a useful tool and can help to eliminate the risk of human error and provide cost effective solutions on how to keep inventory figures accurate. Using barcode scanning equipment to carry out regular cyclical stock counting exercises is a good process to implement into your business. If the counts are performed on a regular basis, analysis of the figures can be easily carried out, and any errors can be picked up and rectified quickly.
Assess your priorities
As with any aspect of a business, some aspects need to have a higher level of priority placed on them, and it can be beneficial to spend some time assessing which are your most popular stock items. Although this can be a time-consuming exercise, the result should be a more accurate model of your ordering requirements.
The easiest way to classify your stock is to group items in terms of their popularity. Many businesses will have a clear core group of products that sell very well; it is, therefore, essential to ensure that you do not run out of stock of these items and have to disappoint your customers. The rest of your stock can then be grouped accordingly, depending on sales figures.
Serious consideration should be given to considering how to keep inventory figures in a central place that can be accessed by all relevant employees. The system that is chosen needs to be able to synchronize when different people make changes, and try to reduce any errors that are made by accidental deletions.
Specialized software exists that can help limit these mistakes, and provide a central place to manage your stock. Some accounting software packages have these tools already integrated into them and are a worthwhile investment. More specialized inventory management software also exists that is specifically designed to help businesses with how to manage inventory effectively.
How to manage inventory and maintain safe data storage
No one likes to imagine the worst happening, but in business, it can be catastrophic to have not implemented a process regarding the safe storage of data. If data is not backed up, then it will be lost forever if your computer breaks or gets stolen. Any orders or future forecasting data would also be lost, which would affect the accuracy of your next ordering figures.
Many large companies will automatically backup all data, but even the smallest business needs to implement this as a regular process. It can be as simple as storing your data on a USB flash drive every week, or slightly more complicated by using specialized software. Whichever method works best for your business, always make sure that this is a process that is included in your procedures and that training is given to employees on the methods associated with how to manage inventory effectively, and why following the process is vital to the efficiency of your internal inventory management system.
For a simple solution to inventory management, chat to our guru for advice.