It’s true what they say: “Inventory is just money in the next room”. Without proper management, however; it’s nothing but a bunch of random miscellaneous stuff. Look at industry giants or even successful local grocery stores! What do they all have in common? – a proven inventory management system that continuously fuels their success.
If you want to join them, which you no doubt do, effective inventory management is key. Therefore, we have compiled everything you need to know about it here in this article. So let’s dig and explore.
What is inventory management? – The basics
It is a process of counting, tracking, storing, organizing and managing your fixed assets, raw materials or finished products until they are sold. Regardless of the size of the business, effective management will make a huge difference to business productivity, which is directly proportional to overall success.
Businesses also use it to simplify and speed up the process. Whether organizing or tracking, it allows users to create and manage tasks of all kinds.
Why is this important?
Without proper direction or dictation, it would be difficult to run your business and increase your sales. This is where inventory management comes in: it helps streamline business processes, facilitates customer service and improves overall efficiency. For example, a business that revolves around distribution and wholesale would require optimized on-time order fulfillment, which is not possible without a management system.
Here are a few other reasons why it’s incredibly important:
- Improves planning and forecasting.
- Promotes and speeds up a smooth workflow.
- Reduces overall time and costs.
Inventory management techniques
You may want to learn how to control inventory, which requires some universally applicable techniques that we have mentioned below:
ABC inventory analysis
This involves classifying objects based on different ranks, levels, or labels.
JIT (just in time inventory)
The technique is to minimize the number of stocks to avoid the risks and costs associated with holding bulk goods.
Bulk shipments
If you are sure that most of your products will be sold, you can buy in bulk, which is cheaper in most cases.
Direct delivery
It revolves around outsourcing which has advantages as well as some disadvantages.
Consignment inventory
In this technique, two parties are involved – one holds the stock and the other distributes it.
Out of stock
If you run out of merchandise, allowing customers to order is called out of stock. Usually it is implemented during the sale season.
Cycle counting
For regular and accurate validation of stock levels, parts of the inventory are counted rather than the entire stock. This is usually done in inventory management software.
Cross-docking
No need to have an inventory when products are not only dispatched but also immediately delivered to another location, such as a warehouse. This system only requires tracking and ordering, which involves inventory management software.
In addition to all of these aforementioned techniques, there are tons more that can help you develop an effective system for keeping, running, and managing your inventory.
Tips for improving inventory management
1. Improve engagement with suppliers
The supplier and customer relationship plays an important role in every inventory-based business, which you should be working on more of. This will allow you to unlock good pricing opportunities and secure supplies reliably.
2. Focus more on the needs
In any warehouse, not all items have the same demand, and this also applies to the most initial products of the company. Focusing on and identifying these elements can seem like a daunting task, but on the bright side, it can revolutionize your management game.
3. Update your inventory management system
How your business manages cycle times, quantities ordered, safety stocks, seasonality and forecasting is of paramount importance. Each operation must be adapted according to the specific needs of the company to ensure maximum efficiency. You will discover how a few small changes in your inventory management software can dramatically improve results.
4. Go mobile
The integration of mobile technology is the number of successful companies that have improved their inventory management. Not only does this eliminate errors, but also speeds up processes. You will no longer need to be connected to a computer or heavy devices to perform certain processes such as scanning, tracking and receiving barcodes. All of these tasks can be handled via mobile technology.
5. Don’t forget the real-time data
Acquiring, analyzing and forecasting data using real-time information can take your inventory management to another level. It’s the best way to make sure you have what it takes to order and deliver. Keep in mind that this will only prove successful if you have accurate data that your system can rely on.
Interesting related article: “What is just-in-time?” “