Inventory Management Tips For Those Who Fear Stocktake
If you’ve ever worked in retail, the word “inventory” is enough to strike fear into your heart. It conjures up images of endless counting in the stock room, working overtime, and generally wishing you were anywhere else.
But inventory is more than just counting stuff up: it’s a crucial component of how many businesses work. Without good inventory management, the firm is as good as dead – it won’t be able to compete.
Proper inventory management involves ensuring that you always have the stock your customers want in hand. The people who buy from you might put up with the odd product missing from your shelves (whether physical or online), but they won’t do so forever. Eventually, you’ll lose customers to other brands and miss out on making new customers.
Let’s take a look at some of the key ways you can improve your inventory management.
Find Ways To Forecast Accurately
The fact that people’s tastes and the seasons change make inventory management tricky. The constant fluctuations in demand mean that some firms can be caught off guard, having less stock in their warehouses than they need.
Forecasting is a subject requiring its own article, how do you do it?
First, it’s good to look at trends in the overall market. Which products are popular right now? And which are selling out at other retailers?
Second, consider last year’s growth rate. It’s like that if you grew by 3 percent last year, then you will do the same – all other things held equal – this year.
Third, factor in all your guaranteed sales and contracts. What’s left over is that which is subject to variation.
Fourth, consider seasonal variation and the state of the overall economy. If the economy is booming, then you may need to order more products to fill your inventory. If it’s in recession, you’ll need less.
Use FIFO (First-In-First-Out)
First-in-first-out is a fundamental principle in inventory management. It means that the oldest products in your inventory get sold first.
This is a good principle in general and not just for perishables: it means that you get rid of older products first that could become obsolete. You don’t want last year’s model.
Ensure You Have The Correct Facilities
Having the best inventory management practices is all well and good. But as Retracom points out, if you don’t have the right facilities, you’re dead in the water. The type of inventory capital you have depends on the needs of your business. If you sell frozen food, for instance, then you need cold storage. It’s common sense, but it’s an essential element of your overall strategy.
Keep Relationships Healthy
Having a good relationship with product supplies is a good idea. It allows you to control better how much stock they send you in any given period. If you have a good relationship with a supplier, then you can sometimes negotiate lower minimums. Lower minimums give you more control to fine-tune your inventory, cutting back on unnecessary expenses. Being in a good relationship is about being clear about your objectives.
