According to Total Retail, in 2018, retailers in the United States suffered financial loss amounting to $300 billion due to poor inventory management. This staggering value constitutes products disposed of in markdown prices because they simply could not stay any longer in storage facilities. Here is why inventory management should be done with the utmost efficiency. No business could survive chronic losses brought about by misscheduling and mishandling of products.
Thankfully there are ways to mitigate the problem. Here are some of the best practices in managing your inventories. ;
1. Use a reliable storage system
Efficient inventory management begins with a reliable storage system. You have many to choose from. A collapsible stillage cage is one of them. The more mobile your chosen storage system is, the better.
Keep in mind that your business goal is to have fast-moving products. It only follows that the inventory tools you use aptly support such a goal.
2. Follow the ABC analysis
With ABC analysis, you assign hierarchy to your products. A products are the most valuable to your business. Meanwhile, C products are the least important. This hierarchy is determined by what sells fastest and requires the most frequent ordering. Think of A products as items you need to review and reorder constantly. B products require monthly ordering, whereas C products need very minimal ordering mostly because they are delivered to you in high volumes and are not perishable.
Following the ABC analysis streamlines your inventory process. You know where to focus on. And you can better manage your storage in line with which products are of the utmost priority.
3. Put the best person in charge
Inventory management requires a Type A personality. The system’s all about organization and you need someone who is highly organized. You cannot have someone in charge who is prone to losing their focus and panicking over big data.
Your inventory manager should have razor-sharp attention to detail. They should be the kind of person who gets a kick from poring over numbers upon numbers and codes upon codes on a never-ending spreadsheet.
However, bear in mind that inventory management is not a job fit for just one person. That is most true if you are dealing with a large inventory comprised of a variety of items. Do not scrimp on your inventory management and assemble a winning team.
4. First in, first out
Affectionately called FIFO by managers the world over, this simple strategy is one of the most reliable when it comes to inventory management. The logic behind FIFO is pretty straightforward; you need your oldest inventory to reach your customers at the soonest time possible. Even if you are selling gadget parts that don’t necessarily come with an expiration date unlike a cartoon of cabbages, it is still in your best interest to have old stocks distributed while new ones come in.
FIFO allows you to minimize the risk of having stocks ruined after spending too much time in a storage facility. The last thing you want to happen is to have a barrage of returned products because they have accumulated dents and whatnot from having been moved in the storage many times over.
5. Use the best inventory management software
Your inventory management team will only be as good as the inventory management software they use. So equip them with the best software in the market. You may want to check out Profit Books as an option.
All businesses must have foolproof systems in place to continue succeeding in an often highly competitive market. These systems must work in synchronicity with each other. No matter how on-point your marketing plans are, if you are not handling your inventories right, your business is bound to suffer. The same applies to the opposite situation.