5 Simple Steps To Control Your Inventory Management
As business grows you find it difficult to do more than just break even. 43% of small businesses grapple with stagnant revenue, while 45% struggle with growing profits in a report by 2016 State of Small Business Report.
Though it seems like you’re doing everything right, using all the right social media and email marketing to get the word out about your products, those lackluster financials which haven’t been solved.
Marketing efforts are good and necessary in today’s business perhaps you may be trying to improve in the wrong places.
If you have a closer look at your business and inventory, you might still use the manual inventory management methods like pen and paper or Excel spreadsheets? These methods are slow, prone to a lot of human errors, inefficient and won’t give the accurate data by which you can make decisions for your future business.
You still have time to implement an inventory tracking system. Make a survey of your inventory system and have an overview of steps you can take towards more effective inventory management.
1. Know your stock from your stuff
Whenever a commitment is made to customer of a particular product, you should have enough of that particular product in your warehouse for immediate delivery. A warehouse also has a lot of “stuff,” too besides your most important inventory. It is recommended to liquidate the stuff and separate it from your stock.
How to identify stock from stuff? Check your annual list, the report tells how many times each product was ordered by customers, transferred or used in an assembly in past 12 months regardless of quantity. A customer may order a single piece or 1,000 pieces of a product which is considered as a single hit.
This is where barcode inventory management can really put you ahead of the game. You won’t have accurate hand records when you have it through hand written or manually keyed purchase reports. Barcode inventory management systems offer real-time data, with little to no human error. You can have exact information about your most popular items is just that?
When you know the exact stock the most traction, the goal is to weed out the extra stuff and arrange your stock in such a way that’s easily accessible, making order fulfillment much more efficient and productive in your warehouse.
2. Liquidate Your Stuff
Get rid of the unwanted inventory once you have your stock and stuff separated. Remember this inventory is not worth what you paid for it. It is worth what someone is willing to pay you for it. Anything above the cost of liquidation is “found money.” It’s time to create your business plan for liquidation. Here are few ways to set one.
Transfer the excess: Transfer extra items to multiple locations where the inventory is needed. A product is considered “dead” in one location, doesn’t mean it won’t sell elsewhere.
Return material to the vendor: Bottom line: Some vendors accept returns while others consider it too expensive.
Reduce prices: A customer like to purchase a discontinued item if the price is marked down enough as compared to a similar item from normal stock.
Offer sales incentives: Offer bonuses to staff and sell off that inventory you want to get rid of.
Let other suppliers know surplus stock is up to grabs: Search the internet to find places that focus on specific items, which is even more effective because there’s likely a large pool of potential buyers.
3. Organize Your Inventory
Systemizing your “most hit” inventory items significantly minimizes the cost of filling orders. Customers expect all the groceries of same item to be in the same aisle or the entire same designer to be displayed in the same area. This is logical warehouse organization so employees can efficiently fill orders.
4. Get your inventory straight
Your inventory flow the best, so decide whether to have a continuous review or periodic review works for you.
Continuous Review Systems: Purchasing the same quantity of items in each order. Monitor your inventory levels and replenish your stock whenever the quantity of an item drops below a set level.
Periodic Review: Ordering products at the same time each period, determining number of items needed based on quantity levels at the end of each period. In this type of system there are no set reorder levels.
5. Make cycle counts…count
A successful inventory management will include a cycle counting program. Here are a few factors for effective cycle counting.
Counting frequency: Count the number of cycles done manually by your employees and also the effects of counting on other factors such as manufacturing, receiving, and the delivery processes.
Counting plan: Choose and divide the inventory levels between location in the warehouse by category, item, or value.
Counting expert: Put a trusted person as in charge of cycle counting system. Having an in-house specialist who knows the ins and outs of the process will help your business reap the benefits of your counting strategy.