THE BEST INVENTORY MANAGEMENT TECHNIQUES THAT COULD HELP YOUR BUSINESS GROW
Wondering why you can’t take your business company to the next level? Maybe because you are not using these inventory management techniques!
In order to run a successful and prosperous business, you need to first understand how important inventory management is. Inventory is a crucial part of your business company, it is a placeholder for money.
Holding inventory is related to a lot of cash. That is one of the reasons why a solid inventory management is essential for growing a business company. Just like money and cash flow, inventory management can make or break your company’s success. Believe it or not, good inventory management saves you money! How? Here is how:
AVOID DEAD STOCK
Dead stock is a stock that can no longer be offered for a sale or be sold, but not because it has expired. Usually, it is because it could have gone out of style, out of season or simply because it has become irrelevant. By keeping an eye on your inventory and managing all of your items, you can avoid dead stock.
If you are selling a certain item that has an expiry date (for example, makeup or food) there is a real chance it won’t be sold in time and this is bad for you. Good inventory management helps you to avoid such problems and unnecessary spoilage.
SAVE ON STORAGE COSTS
Warehousing is usually a variable cost which means it changes based on how much items you are storing. When your store too many items at once or you are having too many products that are difficult to sell, the storage costs will increase. By using inventory management, you will be able to save a lot of money and lower the storage costs.
INVENTORY MANAGEMENT TECHNIQUES
Inventory management is a customizable part of running a company and doing a business. The system is different for each type of business and company, but the point is that every business should strive to avoid human error from inventory management as much as it can. In other words, you as a business company should strive to use inventory management systems. There are some great Point of Sales systems you can use to simplify the overall working of your company. Regardless of the inventory management system, you are going to use, these great techniques will help you grow your business and improve your cash flow:
SET PAR LEVELS
Make the inventory process even simpler by setting par levels for each of the items you have. Par levels are the minimum amount of item that must be on hand at all times. Once your inventory stock decreases, you will know it is time to order more. Usually, you will order the minimum quantity that will automatically get you back above par. The par levels may vary by product, it is usually based on how quickly one product sells and how long it takes for that product to get back in stock.
FIFO OR FIRST-IN-FIRST-OUT METHOD
This is a very important principle of the whole process of inventory management. It means that your oldest items get sold first. This is especially important for short-lived products so you don’t end up with dead stock or unsellable products. In order to manage this kind of system, you will need an organized warehouse. By doing so, you will ensure all of your old products stay at the front.
A lot of different problems can pop up related to inventory management. These problems can destroy unprepared businesses. It is not a matter of a complication or a problem arises, but when. You need to have a plan – how will you react, how is this going to impact your business, and etc.