Inventory management is a critical component of a company’s success, yet many small firms do not practise appropriate inventory management when it comes to the things they sell. Some firms have insufficient inventory, making it challenging to satisfy consumers’ expectations by offering enough accessible items. This often pushes clients away, sometimes for good.
However, many businesses take the opposite approach, stockpiling things “just in case.” Though you’ll always have the things your consumers want, the danger with this technique is that you’ll lose money. Excess inventory not only consumes precious cash flow but also increases the cost of storage and tracking.
Effective inventory management falls somewhere in the middle of these two extremes. While achieving an effective management process needs more work and preparation, your revenues will reflect your efforts. With that in mind, here are some of the ways to control stock in your business.
Use Stock Control Software
It’s crucial to have some kind of stock control system in place when you want to know how to manage your business inventory more effectively. This could be something as simple as writing things down on a piece of paper, but by far, the best option is to use specific stock control software.
An automated inventory management system aids organisations in maintaining a competitive advantage and increasing production. A computerised system should allow for continuous, real-time inventory monitoring. It should also help with sales and delivery, ideally using a system that can create fulfilment paperwork, including picking and packing notes as well as invoices. On top of this, it should assist with procurement using automatic reordering features. Finally, it needs to be able to produce helpful reports such as inventory summaries and totals, transaction reports, and order histories.
Use the First In, First Out (FIFO) Approach
Goods should be sold in the same order in which they were acquired or generated; this is the principle behind FIFO, or ‘first in, first out. This is particularly crucial for perishable items such as food, flowers, and cosmetics. However, it is also a good idea for non-perishable products since items that have been hanging about for too long may get damaged or otherwise out of date and unsellable. The ideal approach to employ FIFO in a storage or warehouse is to add new goods from the rear so that older products are at the front.
Audit Your Stock
Even if you have strong inventory management software, you should still physically count your inventory on a regular basis to ensure that what you have in stock matches what you believe you have. Businesses use several procedures, such as an annual, year-end physical inventory that counts every single item and regular spot-checking, which is especially effective for goods that move quickly or have stocking concerns.
Always Track Your Stock Levels
It’s crucial to understand what your stock levels are at all times, ideally in real-time. In this way, you will be aware of anything you are short of or anything you have too much of (and which you could sell at a discount, for example).
Set up a strong method for managing stock levels and prioritising the most costly goods. Good inventory management software saves you time and money by handling most of the hard work for you.