Poor inventory management can result in loss of sales and escalating costs, so getting a handle on your stock control is key.
It’s getting the balance of stock right. Not having enough items can result in stock-outs, where you don’t have what your customers want. This can result in a scramble to expedite higher-priced replenishment – or, even worse, you lose the sale to a competitor. Either way, you’re putting your business at risk unnecessarily.
On the other hand, holding excess stock can impact your operations too. There’s warehouse costs, insurance, shrinkage, depreciation and asset taxes. Excess items generally cost businesses an additional 25% to 50% per year. That’s why it’s so important to have the right inventory management tools.
Once you’ve implemented the right inventory management software for your business, there are steps you should take to improve your stock control processes.
Taking the time to evaluate your current practices will help you understand where improvements need to be made. Effective inventory management is purpose driven. So, considering what each link in the chain does – and why – allows you hone in what functions need improving. Make sure you also consult internally with members of your team to identify potential problem areas.
A major part of inventory management is knowing your exact stock levels. With an inventory control system, you’ll have 24/7 access to real-time data so you can stay on top of orders. Perform regular, routine stock reviews to track every single item you have, including lost, stolen or damaged products.
It’s important to make sure you’re never out of stock, especially when demand is high. For smooth flow of product during busy periods, automate your purchasing processes so replenishment is taken care of once your stock falls below a certain number. That way, you’ll always have the stock levels you need, exactly when you need it.
When you start tracking how often you need to restock certain items, you’ll be able to identify trends in consumer behaviour. Be aware of periods when ordering is high, and when it’s less. Preempting what your customers want, before they even know they need it, will help your business be at the forefront of their purchasing decisions.
Leave traditional stock control methods behind. Just-in-time inventory management (JIT) is an approach used to increase company efficiency by stocking products when in demand and avoiding stockpiling. By reducing the amount of inventory stored in the warehouse, this allows you to cut costs and avoid product waste due to expiration. However, this stock control method relies heavily on having an efficient supply chain.