For each of the products you sell, do you exactly know how many stocks you have on hand?
What about the raw materials and other supplies?
At a glance, the concept of inventory management might seem pretty simple – just knowing the number of stocks, but you know it is actually much more complicated than that!
For the business to run smoothly, you have to know the whole system of inventory from stocks, raw materials to supplies as well as the number of these stocks to be ordered for future demand.
What is Inventory management?
It is more than just the accounting of what you have stored in the warehouse but it involves controlling, storing and tracking the stocks from the supplier to the point of sale.
It is necessary for the business to be on top of everything, especially the management of the supply chain from start to finish.
Why is Inventory management important?
Gone are the days when manual inventory is king.
It brought a whole lot of problems.
Time was the enemy while errors were its ally.
The process had to be monitored from having to prepare for orders, doing the actual purchase to regular manual stock monitoring and replenishing stocks – a very time consuming exercise!
All these tasks take a lot of significant company time and sadly, it could have been spent in strategizing and making things work for the business.
Not to mention the reconciliation of real time stock levels as against the point of sale, continuous lags in repurchasing when stock levels are low, resulting in inconvenience, missed sales and unhappy customers.
Theft and pilferage is also a growing concern.
Overselling, too, can be an unrelenting problem when there is poor inventory management.
That is why it is critical to have an effective inventory management system to avoid all these.
Here are some tips to consider for effective business inventory management:
Tips For Effective Business Inventory Management
Choose an Inventory Valuation Method
There are different kinds of inventory methods and it is up to you to choose the best one suitable for your business.There are three types namely: FIFO (First In First Out) , LIFO (Last In First Out) and WAC (Weighted Average Cost).Although FIFO is the most common method there are other companies who adopt one that best serves their products.
Track and Audit Stock Levels
Your stock should be well tracked and monitored.Stock availability and assessing orders is critical.Tracking stock levels also helps manage and monitor product demand.At the same time make sure to audit stock levels.An inventory management software can greatly make a difference.
Know and Identify Slow-moving Stocks
If and when your inventory management software system can determine a certain stock that languishes in the warehouse for a period of time, chances are the products are not saleable anymore or perhaps there is a need to do extra effort in promoting the product to create awareness and demand.By identifying slow-moving stocks earlier, you get to save some costs in not reordering and making sure that these stocks sell for good through promos and bundles.
Understand and Forecast Demand Correctly
To be able to have an effective inventory management, understanding and forecasting demand correctly is key.This can be done through data and insights provided for by the POS and inventory management software that would show market trends, historical sales and predictive analytics.
Easy POS sets your establishment the right way by helping you manage day-to-day transactions on the dot.
A strong focus on quality control is needed.Inculcating quality control into every aspect of inventory management, and accurate recording of the important elements of quality control, such as accurate ordering and invoice matching, is vital.It’s also helpful to ensure that every inventory management personnel understands and adheres to the processes in place.
Set-up Point-of-Sale (POS) technology
POS Inventory and management software can help your business track inventory in real-time.When products are sold, your inventory management software automatically updates to show inventory levels and the cost of goods on hand. As the name suggests, POS technology is utilized at the point a sale is made.This can further be used in the manufacturing process to be able to help monitor and track supplies and raw materials as they are utilized.The retail POS system should integrate seamlessly with your inventory management software to help you easily track incoming and outgoing inventory.
Make Use of a Barcode System
Those black bars and characters help in inventory management by encoding information that makes it faster and accurate for any business to master their inventory management.These barcodes identify information like color, size, branch location, production and expiration dates.They are also useful to show more visibility of the products and know about the expiring products, so it can be released ahead.
Be Mindful of Data and Insights
Good decisions are derived from analysis of data and interpretation of insights.A robust inventory management system supplies pertinent data that is relevant, helping you come up with data-driven decisions.
Automating inventory management by using a POS and inventory management software is the only way to curb inventory issues.It helps businesses to have sufficient inventory on hand at designated branch locations to meet the demands of customers.