Are you wondering why you always have too much or too little of certain products? Poor inventory management is one of the reasons such a problem exists. You might be unaware of low or high stock or lack the data or system to track the popularity of certain items in your inventory. These factors have a direct effect on your bottom line and operation costs. In such cases, you need to improve inventory management to maximize your small business’ potential. Doing so allows you to manage your orders and resources efficiently without overspending.

These are some of the best practices you can implement to improve inventory management.

Make Your Inventory a Priority

Categorize your company’s inventory by creating priority groups. This enables your team to determine which items are bestsellers and sell out frequently, and which products are valuable but cost more and take longer to move. You can also add a group for items that are mid-priced and/or cost less but are easy to move. These priority groups allow you to determine which product to focus your resources and efforts on, and which items you should always restock.

Monitor and Record Item Details

Record the details of the items you receive and store in your inventory. You should file information such as barcode data, SKUs, date you received an item, supplier, item cost, and other similar details in a cloud storage database. Make multiple copies of these details so that you can easily find them when you audit your inventory. Keeping records also enables your team to identify factors that may change over time when you restock.

Conduct an Audit Regularly

An audit keeps you updated about the items you currently have and have already moved. You can do a yearly comprehensive count, daily, weekly, or monthly. Physically count your products in your storage room or facility so that it matches the number in your database. This practice enables you to determine which items you need to restock or stop orders because of poor sales.

Review Performance of Suppliers

An unreliable supplier has a negative effect on your sales figures and profits because of their delays or cancellations of orders. This reflects poorly on your brand image as well because you fail to complete the purchases of your customers. One way to improve inventory management is to evaluate and review suppliers’ performance. Do they often short orders? Do they respond to feedback for improvement? These are just two of the questions you must ask a supplier when you assess your relationship with them. If they don’t meet your requirements and standards, prepare to move on and find another partner. Doing so might cause short-term supply problems. However, a better supplier results in better long-term results.

Implement the 80/20 Rule

Some companies follow the 80/20 rule wherein 80% of their profit comes from 20% of their inventory. Learn to prioritize the bestselling products of your stock in your inventory management process and system. Determine the sales lifecycle of these products so that you know how many you move in a day, week, and month. Doing so enables you to restock whenever supplies are low to regularly meet customer demand.

Implement a Consistent Process

Improve inventory management when you implement a consistent process that your entire team follows. Standardize the process of receiving, restocking, ordering, and releasing products. This reduces mistakes along the way and if there are errors, they’re easy to trace and rectify. A standardized process also makes it easier to count your inventory whenever you audit your supplies. Keep the standard you implement simple and easy to follow. Be flexible and make changes whenever you think they’re necessary for the improvement of your business.

Monitor Sales Data

Learning how to use data is advantageous to your growing business. That’s why it’s important to monitor your sales numbers. Go beyond end of day sales figures. Track which items you were able to sell and their total number. Identify which products are regular bestsellers and which ones experience a seasonal upswing or downswing. Determine which items sell better over the weekend or during weekdays. This granular data allows you to manage your inventory efficiently and spend your resources wisely.

Make Orders Yourself

Some suppliers will volunteer to place orders for you whenever you need to replenish your inventory. However, you might not want to agree because their priorities are to move items which aren’t always your shop’s bestsellers. Place orders yourself so that you get the products you want because you’re the one that knows which items are in demand and sell out faster than others. Use data to determine the appropriate time to place an order for items you need to replenish. Factor in seasonal upswings and downswings whenever you order. This allows you to maintain a supply of products that are in demand.

Spend on Technology

You’ll need to spend some money to improve inventory management effectively. As your business grows, you’ll have to upgrade from notebooks and excel sheets to monitor all of the items that come and go. Inventory management software simplifies the task of inputting, gathering, monitoring, and analyzing data. This enables you to track stocks, orders, delivery schedules, prices, and other details you need to meet the demand of your customers. You also benefit from stored data on previous sales cycles. This allows you to identify which days, weeks, months and/or seasons are the ideal times to boost your sales and marketing efforts. Invest in mobile scanners and POS systems that simplify inventory monitoring. Choose software and technology that integrates well with your needs or current system. Complementary systems make it easier to transfer data from one to another whenever you need to upgrade.

Reduce or eliminate problems you might encounter with inventory management when you implement the best practices mentioned above. Seamless inventory management allows you to monitor sales figures and the movement of items in your stock.

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