As a new business owner, there is a lot to think about. Inventory management may not seem like the most important task on your to-do list at first. However, over time, you will find that it is one of the key components of the efficient and profitable operation of your business. Here are some inventory management tips to help.
Table of Contents
What is Inventory Management?
Supply chain issues have not only driven up prices and reduced lead times, they have actually exposed some of the big inventory management pitfalls that many businesses have been hiding for years. In fact, you might say that inventory management is more important today than ever.
In fact, Inventory Management it is the process of ordering, storing and using business materials and products. The goal of inventory management is not to order too little, which makes it difficult to meet customer expectations and/or fulfill orders. At the same time, you don’t want to overstock products that can suck up your cash flow and put unnecessary strain on your people and systems.
Any good entrepreneur will tell you that effective inventory management falls somewhere in between these two extremes. In other words, it is about matching stocks with demand for minimal waste and lower potential costs. While easier said than done, there is almost always room for improvement.
4 Tips for Better Inventory Management
As you get into inventory management in your own business, here are some tips and best practices you can use to gradually improve your efforts:
-
Invest in supplier/vendor relationships
It’s easy to get so caught up in the math of inventory management that you forget about the relational side of things. If you do not invest in the relationships you have with vendors, suppliers and logistics consulting partners, you are undermining your efforts and doing yourself a disservice. That is why we recommend starting here.
Do not limit communication with sellers and suppliers to problems. It’s important that you also leave positive feedback and take the time to chat or call so you can invest in the relationship. It may seem like a waste of time at first, but that’s what drives the relationship forward.
Proper product and inventory tracking can greatly improve your efficiency. One way to grow in this area is to invest in the right tools, including systems to centralize your tracking efforts.
Good inventory tracking can help you maintain the quality of your product by helping you determine exactly how long a product has been in stock. It also gives you a clear view of shelf life, storage capacity and the flow of products in and out of your warehouses. This kind of reliable tracking puts your entire team on the same page and results in much greater efficiency.
Things don’t always go right. In fact, you should assume that more often than not, things will go wrong. (This is not necessarily the case, but it will help you prepare for those occasions when they do occur.)
For best results, improve your forecasting abilities and look for ways to reduce lead times (which will help you move faster when there are supply chain issues or inventory shortages). It’s also wise to have backup plans in case your institution runs out of space. This may include options to find more space in an existing warehouse and/or expand to another warehouse.
-
Prioritize the 80/20 Inventory Rule
As you probably know 80/20 rule refers to inventory. In this case, most businesses find that 80 percent of their income comes from 20 percent of their shares.
At first glance, you might assume that the best option is to get rid of the 80% of your stock that is not moving the needle of your business. However, it’s not always the best game. Instead, you should focus on optimizing the 20 percent of the stock that drives your business. The top 20 percent should always be available. In other words, you must make sure you always have enough to sell. (Anyway, you want to rearrange this inventory a bit.)
Adding everything
When you get serious about the smallest details of your inventory management approach, good things happen. There will still be problems, frictions, obstacles and bottlenecks. However, they will be much smaller and farther apart. And, after all, isn’t that one of the main goals of inventory management? The more fluid and predictable your inventory is, the better for everyone!
!function(f,b,e,v,n,t,s){if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};if(!f._fbq)f._fbq=n;
n.push=n;n.loaded=!0;n.version=’2.0′;n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];s.parentNode.insertBefore(t,s)}(window,
document,’script’,’https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘1610003529323997’);
fbq(‘track’, “PageView”);
