Proper inventory management can be a tricky affair that requires the necessary tools and expertise to ensure that the moving components in your business stay well-oiled. This is because when your inventory is wrong, everything else goes wrong. You could lose a potential sale because you do not have a particular product on-hand, or you could get your money tied up in products that do not sell. There are many unwelcome scenarios that could result from poor inventory management practices. The following are ten of the best ways to manage your inventory.
- Keep Sensible Stock Levels
You will have to harness your buying skills if your retail business is going to be successful. When business is thriving, and you are making sales, it is easy to get caught up in spending the cash on new stock to get that comforting feeling of knowing you have a full store. Nonetheless, you need to approach this matter carefully to avoid overstocking and running up a debt with your supplier.
Thus, look at your reports to see the average rate at which that particular product sells. Numbers do not lie regardless of what your supplier tells you. Do not concede to those end-of-line discounts for products you do not really need. Do the math to find out what is really important.
- File Your Purchase Orders
Purchase orders are your official, written records of purchases. Every time you make a purchase, you need to record it. The benefit of doing this is that you will be able to avoid mistakes and disagreements since you will be able to use them to cross-reference against suppliers’ delivery notes. Moreover, you will have a history of purchases that help you decide what you should buy in the future, and they can serve as resources for your team to know what is going on when you are away.
- Have Inventory Management Software
Managing your inventory manually is possible but very time-consuming. Moreover, it will be prone to unavoidable human errors thus compromising the accuracy of your records. Fortunately, inventory management software can smoothen out these processes to make your work a lot easier. This software tracks manages and organizes product sales, material purchases, in addition to other inventory management processes.
This will allow you to reduce the time and effort spent doing basic tracking and instead focus on finding, analyzing, and reducing inefficiencies. Nevertheless, it is imperative that you get your software from the right inventory management software Company to ensure that you get a solution that fits your needs.
- Use Bar Coding to Reduce Receiving Errors
You are more likely to make inventory errors when you are dealing with similar products or when your sales volume is high. Barcodes are essential in reducing these errors as you can attach a unique code to each item. This is a better way of keeping track of all the items you have as you can easily tell which items have been sold instead of manually looking through your stock. Nonetheless, you need an inventory management software system to be able to integrate these into your inventory management. More on this later.
- Use the First In, First Out Approach (FIFO)
It is good practice for your products to be sold in the same chronological order as they were purchased. This is especially relevant when it comes to perishable products that you cannot afford getting damaged from staying too long in the inventory such as food, horticulture, and cosmetics. The best way of incorporating FIFO is by always adding the new items to the back so that the older products are at the front.
- Perform Quality Control
It is important to know the condition of all the items in stock in order to avoid returns. As such, make sure that you regularly check through your stock to ensure that all your products are looking good or performing well.
- Perform Audits
Even with stellar inventory management habits, it is important that you periodically do an actual count of your inventory to ensure that what you have in stock matches with what you have in record books. There are different ways of going about this. But the best is to perform a monthly audit where you count every single item. This will prevent mishaps from affecting your bottom-line revenue and reputation.
- Prioritize
In every retail business, there will always be items that require attention more than others. Utilize the ABC analysis to prioritize your inventory management. Here, you will need to separate products that need a lot of attention from those that do not. You will achieve this by looking through your product list and placing each product to one of these three categories:
A – Here, you will place the high-value that have a low frequency of sales.
B – Here, you will place products of moderate value that showcase a moderate frequency of sales.
C – Here, you will place low-value products with a high frequency of sales.
The category A items will need regular attention as they have a significant financial impact while being unpredictable in terms of sales. The category C items do not need as much attention as they have a smaller financial impact while constantly turning over. The Category B items will require average attention.
- Hire a Stock Controller
Stock control is important for showing the number of products you have in stock at any given time. If your inventory is large, it would be wise to have one person dedicated to managing it. The stock controller will be responsible for processing purchase orders, receiving deliveries, and ensuring that everything that comes in matches that which was ordered.
- Enter Received Orders Immediately
It is important that you record any new deliveries into your inventory system as soon as they arrive. Understandably, this can be hard to do when you are busy handling other operations and relegating that task for later. However, if a product is sold before it is entered into the system, things can get messy. Always take that moment to enter your receipts as soon as a new delivery arrives to avoid headaches later on.
With studies showing that over 65 percent of stores have inaccurate inventory records, it is important to take control of your inventory. This is because you cannot afford to make losses considering that only about 50 percent of small businesses survive past four years. By using the above tips, you should be able to have an efficient inventory system that is averse to errors.
