What is inventory management?
Inventory management is an essential part of the supply chain management that aims to always have the right quantity of products that are for sale, at the right time. When done effectively, businesses can reduce costs by not buying excess inventory and increase profits by having the right inventory when a customer intends to buy it.
Good inventory management software can help you track your inventory in real-time – thus making you aware if there is an excess or shortage of certain products.
Inventory management software can help you:
- Reduce costs, boost your business’s income and improve cash flow
- Keep track of your inventory in real-time
- Predict sudden spikes in demand
- Prevent product shortages
- Prevent excess stock
- Allow for easy inventory analysis on any device
- Be accessible from almost anywhere
- Optimize warehouse organization and precious time
- Allow the tracking of inventory across multiple warehouse locations
Alongside inventory management software, businesses should use different inventory management techniques for optimal results.
Here are the most common techniques that small to medium-sized business use to manage inventory:
- The FIFO approach (first in, first out). This method dictates that the goods should be sold in the same chronological order as they were purchased or created. This is especially important if you are selling perishable goods like food, supplements, and flowers. An online supplement store owner, for example, has to be aware of the expiry dates of his products and apply the FIFO method to improve his inventory. It’s also a good idea for businesses that sell non-perishable goods since items sitting around for too long might degrade over time, become damaged or out of date and unsellable.
- Fine-tune forecasting. Accurate forecasting is essential. Your projected sales calculations should be based on factors such as sales history (which you can see on your Nventree dashboard), market trends, price growth over time, marketing efforts, promotions and the economy.
- Identifying slow-moving stock. If you have a product that hasn’t sold at all for the last 6 to 12 months, it’s probably wise to stop stocking that product. Creating special discounts or promotions for those products can help you speed up the sales process.
- Auditing stock. Even if you have purchased the best inventory management software available on the market, you should still count your available inventory periodically. This is done in order to make sure that what you have in stock matches with what you think you have. Businesses use different techniques, including annual (year-end) physical inventory counts – this is useful for products that are moving fast or have stocking issues.
- Tracking stock levels all the time. Having a solid system in place for stock control saves you time and money by doing much of the heavy lifting for you.
- Using web-based inventory management software. Search for software which has real-time sales analytics. Nventree connects directly to your online sales platforms, allowing you to have a live overview of stock levels.
- Not forgetting about quality control. No matter the goods, it’s important to ensure that all of your products look great and function correctly. It can be a simple task, you can ask your employees to quickly examine the products during stock audits.
- Categorizing inventory. Many businesses find it useful to have tighter controls over higher-value items by grouping them accordingly. Also, it is a lot easier to find items in your warehouse if they are properly categorized. This reduces the time spent searching for the item, thus saving you money.
- Reducing equipment repair times. Essential machinery isn’t always in working order, so it’s important to keep an eye out for things that might look or feel out of order. A broken piece of machinery can be quite costly, take for example a forklift. If the forklift brakes down, it would make it almost impossible to get to products that are on the top shelves in your warehouse, causing a delay in handling time or even delivery. Monitoring your machinery and its parts is crucial to understand it’s life cycle, so you can be prepared before the problem even arises.
- Reviewing lead times. Especially if you don’t know your means of transportation, transfers, and shipping to stores can be unpredictable. Make sure to be aware of the shipping requirements and what days your shipper will or won’t be open during holidays or other busy times. This could throw off your entire expectations and force early markdowns.
Inventory management and meeting customer demand is an essential part of being a retailer. When you are growing a retail business, you need to have enough time, cash and resources to spend on activities like marketing without running out of stock and disappointing customer. Nventree is the software that can help you with this balancing act by saving you time and giving you an accurate overview of your current inventory – making each decision you take a lot easier.