6 Tactics to Improve Inventory Management
Have you experienced issues with shortages or excess inventory? Rethinking your approach to inventory management can help your business adjust to the changing landscape and take advantage of opportunities for growth.
The global pandemic and other economic forces have disrupted supply chains and led to seismic shifts in demand, creating a need for strategic planning around inventory management. Rethinking your approach to inventory management can help your business adjust to the changing landscape and take advantage of opportunities for growth.
Whether you operate in retail, wholesale, manufacturing, food or distribution sectors, your sales volume hinges on having the right amount of stock on hand to ship at the right price for your customers. A miscalculation can result in missed opportunities for sales or an excess of inventory. Following these six tips can help you make sure your inventory is where it needs to be.
1. Invest in inventory management software.
A small business may be able to get away with tracking inventory on a spreadsheet. But as your company grows, you need a system that’s easy to use and automates most of the work. Using inventory management software can track your inventory while also giving information on buying trends that can help predict your sales.
2. Utilize point of sale (POS) technology.
A good POS program can tie into your inventory management software, tracking what you have in stock in real time. Each time you sell something, your POS program can take it out of your available inventory list, making it easier to know when to order more. It can also offer important information on your business’s pricing and buying trends.
3. Remember to audit your inventory.
Technology is wonderful, but there can be errors. Decide on a time frame to audit what you have in your inventory and do a manual inventory check against what is in the system. You don’t want to lose customers because what they ordered online wasn’t in stock as promised.
4. Know your vendors.
Make sure you understand the capabilities of any vendors you build a relationship with. If they have a problem with shipping a product in the amount of time you promise a client, or if the product is not in the condition you state it is, it could cause you to lose business.
5. Apply the 80/20 rule.
The 80/20 rule that seems to apply to everything in life also applies to inventory. In the majority of instances, 80% of your sales will be from a specific 20% of your products offered. Use your inventory management system to identify the top 20% and make sure you stock more of them while maintaining a smaller inventory of the other 80%.
6. Plan for possible disruptions.
External events can have a significant impact on supply and demand. Plan for potential disruptions due to the pandemic, severe weather and other factors to ensure that you can keep your promises to customers.
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