Great products are only part of the equation for a successful company. You have something people want, but if you can’t get it to customers quickly, it’s hard to gain traction in the market. That’s why product inventory management is so crucial for companies. And when only 43% of small businesses track inventory, not many businesses do it right.
You need the right inventory control system to serve customers well and keep your business running smoothly. Follow the guide below to take control of your inventory management system.
Prioritize Inventory
Not all of your products are created equal. You may have a lot of products people buy, but the chances are good that a few of those products sell better than the rest.
Much of your company’s sales will likely come from a small portion of your products. These are the products you should prioritize in your inventory control system.
Focus on increasing your stock of these items and de-prioritize holding large quantities of less popular products. This will allow you to fulfill the demand of fast sellers and not waste space storing products that will sit for a long time.
Forecast Demand
Having enough products for future demand is something that many warehouse managers get wrong. They only consider the demand they have today and not what will occur in the future.
This is especially important for busy seasons like Christmas. You can expect many more sales if you’re in the consumer market. Without proper forecasting, you may end up running out of products.
Look at historical trends for your products and your competitors. Use that data to forecast how much inventory you should buy to ensure you don’t run low on products.
Decide on FIFO or LIFO
Determining the products to ship first is critical for your operation. You have two options for this:
- First in, first out
- Last in, first out
If you have static products that don’t change, either will work fine. It doesn’t matter if a product sits in the warehouse since it won’t go bad. This means LIFO or FIFO will work well.
But if freshness is a factor, you can’t afford to let old products sit. Take food, for example. You’ll end up with a lot of bad products if you only ship products that have just arrived.
In cases like this, you’ll need to adopt the FIFO model.
Use Software Where Possible
One mistake many new companies make is not using software to manage products. They’re still new, so they try to save money wherever possible.
The problem is that you may lose more money than you spend when you make mistakes that are easily avoided.
Look at the common inventory control software programs that other companies use. You can use this software to manage inventory levels, run reports, and many other things.
It’s also smart to look for the best free inventory app if you’re concerned about price. Even if you can’t afford the best app in the business, that doesn’t mean there aren’t affordable options that will help.
Track Your Inventory
Some companies just put their products in their warehouse and call it a day. Even if they know everything they have with an inventory app, they may not know where the stuff is.
This is a problem when it comes time to find products to ship. If you have products that don’t sell often, you may forget where they are in the warehouse.
Tagging your inventory is a great way to get around this. Whether you use RFID or another technology, put systems in place to mark where your products are.
Train Your Team
Some companies do the bare minimum when training employees. They give people a baseline of how to do their jobs. The problem is that there is a lot of room for interpretation when you do this.
It makes more sense and makes people more productive to lay everything out. Create standard procedures for everyone, from your warehouse workers to your administrative team.
These procedures will guide people on how to behave and do their jobs. It will also make it easier to onboard new employees and get them up to speed faster.
Otherwise, people will have different ways of doing things and may not work effectively.
Audit Your Suppliers
Some companies do a great job of running a tight ship. They train their employees well and do a great job of knowing how to run their internal systems.
But some of those companies fail to look outside of their organization. This failure leaves them open to problems caused by their suppliers.
Regularly check your vendors’ performance over time to see how well they perform. Do they constantly perform well, or do you see a gradual decline in quality?
If a supplier isn’t performing well, be sure to reach out to see if there’s a problem. Work with them to try and fix things and get quality back to normal.
If you have a supplier that doesn’t improve, it pays to start looking elsewhere to find a more reliable partner.
Invest in Inventory Control
It isn’t enough to have an amazing product when you have a business. You can solve a problem better than everyone else in your industry, but if you can’t get your products to customers, you won’t be able to get sales.
That’s why it’s important to invest in an inventory control system that helps you keep track of your inventory and find it to send products to customers. Use the guide above to optimize your product inventory system as best you can.
Are you interested in reading more tips that will help you optimize the other parts of your business? Head back to the blog to read more business guides that will help.
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