Inventory management is a crucial step for any lucrative business. Still, many small businesses take it very lightly and don’t practice good management of the products they sell. Such businesses may have too little inventory, failing to meet customer demand and as a result, losing potential business.
Meanwhile, overstocking can also cause the business to lose money. Having too much inventory ties up cash flow. It also costs more money as well as resources to store and track items in the warehouse.
Effective inventory management falls somewhere in the middle of these two extremes. It takes a lot of effort and planning to run an efficient management process, but the profits are definitely worth it! We’re offering you 5 tips for effective inventory management that can lead to a thriving business with happy customers and sky-rocketing sales.
Polish Your Organizational Skills
One of the biggest challenges is keeping track of products and strategically organizing warehouses to manage inventory effectively. Making a list that categorizes similar products together in groups is a good approach. You will no longer have to search haphazardly for a specific item when you already know it’s more likely to be with certain grouped items.
Also, by storing related categories of products together and creating a best-selling product section close by the packaging station, you will end up improving efficiency and get better at tracking orders.
Invest in Inventory Management Software
While small businesses can survive without inventory management software, this approachable is not sustainable for a growing business. You could end up losing count of inventory and spending more time on the task. Good inventory management software streamlines the tracking process, promotes accuracy of records, simplifies documentation, makes record keeping easier, and provides all the analytics essential to your business.
Keep track of inventory with barcode
When you’re processing hundreds of orders, you’re pushing to get a lot done in a short amount of time which increases the likelihood of human errors disrupting your workflow. Keeping records of product information including SKUs, suppliers, countries of origin, etc. can help you keep track of inventory and identify factors that impact products. Automation of warehouse operations through barcodes is a great solution for this problem. Barcodes help improve picking accuracy by helping pickers find the right bins and shelves for items. In the long run, it reduces downstream costs for incorrectly packaged and shipped orders.
Make Data Driven Decision
Your current inventory and sales trends can help you effectively forecast any future inventory decision. Look at purchase orders and sales data to determine what to reorder, when to reorder, and how many units of a product you should reorder. Many companies have a min/max method strategy to determine when it’s time to reorder. Small businesses find spreadsheets very effective but large businesses need more powerful solutions, such as a cloud-based inventory software with built-in capabilities to make reordering decision.
Audit your inventory
Some businesses perform comprehensive auditing of inventory and stock once a year. Others prefer to do it monthly, weekly, or even daily or all of the previous. It depends on the size of your business and its needs. Regardless, regular spot checks are one of the most effective ways to ensure your inventory matches up to what you think you have in stock based on recorded data.
Running an online business requires a lot of vigilance. There are a lot of moving parts to run a successful business, which includes effective inventory management. Implementing these solutions could help reduce the complexity by streamlining the process to make it more cost-effective and productive. Above all, it will help your business grow and prosper in the long run.