Effective inventory management enables you to schedule orders on time and allows you to maintain an adequate level of stocks. It also allows you to monitor the condition of items you’re delivering to your storage spaces or directly to customers. Inefficient inventory management might lead to:

• Delays in deliveries
• Overstocking
• Shortages
• Damage or loss of items

These problems cut your profits, have a negative effect on your brand, and increase your costs. You must look for ways to improve inventory management so that you can evade these problems.

These inventory management best practices enable you to improve operations and keep stocks at the level you desire.

Organize Inventory by Type

Determine the types of goods in your inventory. After doing so, create distinct categories and organize your stock accordingly. This enables you to carry out a cost-efficient ordering schedule. It’s easier to identify which items to buy more of and the frequency you need to purchase them. This also allows you to know which products generate the most profits but cost more to procure or produce and take time to sell. Consider organizing your products into categories such as high cost, low cost but easy to move, and in-between. This approach allows you to prioritize which goods to order more frequently.

Track Information about Your Goods

It’s difficult to establish a schedule for ordering goods and identify the number of items you need in your inventory when you don’t monitor your products. You’ll need information about your items to improve tracking efficiency. Some of the details you need to know include:

• Country of origin
• SKU
• Barcode data
• Suppliers

These details allow you to determine the amount of inventory you currently have. This enables you to schedule orders efficiently and identify the exact number of goods you need to replenish your stock. This also simplifies the process of tracing the items you lost.

Regular Inventory Audit

Your inventory and how fast you can sell them influence the budget of your company. The longer goods stay in storage, the more money you spend. Always be aware of your inventory to avoid incurring additional costs. One of the inventory management best practices you might need to carry out is a regular inventory audit. This practice involves a count of all items in stock. Perform this audit once a year, monthly, weekly, or daily. You can schedule a daily, weekly, or monthly audit depending on the needs of your company. This approach ensures you always have an update of your goods in store.

Assess Business Partners Performance

Evaluate your business partners’ performance to determine if they should still be your suppliers. Some of the things to look into when dealing with suppliers:

• Do they deliver the requested goods on time and in good condition? If yes, their partnership is worth maintaining.
• Do they usually lose or damage goods during deliveries? If yes, your brand might develop a bad reputation in the eyes of your customers. It also cuts into your profits and increases costs. Their handling of deliveries is an indicator of the quality of the service they offer.
• Do they always have a shortage of the items you need? Shortages might cost your business customers because the products they want are often out of stock.

If you think your business partners don’t meet your standards, look for other suppliers that allow you to maintain your inventory without incurring additional costs.

Enforce the 80/20 Rule

Many companies implement the 80/20 rule. This means that 80% of revenue generated comes from 20% of your stocks. Prioritize managing this small percentage of your inventory. Create sales and marketing campaigns that enable you to move these products. Consider upselling to customers so that you can sell these items faster. Identify the fast-selling products in your inventory. Study their sales cycles and the amount you’re able to move within a timeframe. This enables you to schedule the appropriate number of orders. This also allows you to manage inventory and maintain it at a level that coincides with customer demand.

The Importance of Consistency

Consistency is important whenever you implement inventory management best practices. Employees shouldn’t implement their own process when managing your company’s stocks. Create and implement a process that everyone in your inventory management team follows. This simplifies the process of determining mistakes and discrepancies such as shortages, lost or damaged goods, and possible overstocking. It’s also easier to track the items that move in and out of your storage spaces.

Make a simple and easy to follow inventory management process so that you reduce or eliminate possible errors along the pipeline. Record transactions such as receiving goods or sending them to a customer. Investing in inventory management technology improves your processes from scheduling to deliveries. Software enables you to store data safely and retrieve it whenever you need it. It also lets you review data, schedule deliveries, find goods, manage inventory levels, and perform similar tasks.

Regular Sales Monitoring

Sales monitoring is part of any effective inventory management best practices. Determine the type and number of products sold at the end of each business day. This allows you to always have an updated stocks total. This also enables you to have data on which items are top sellers based on season, month, or category. Identify bundled products that customers often but. This lets you upsell or provide a package that offers good value to a customer. A detailed approach to leveraging data boosts efficiency and maximizes the profit you can generate from your stocks.

Leverage Technology and Tools

Some form of automation is a must to eliminate or at least reduce the effort consuming process of manual inventory counting. Consider investing in inventory management software or if you already use such tools, maybe it’s time to upgrade them. This technology enables you to store and manage inventory data securely and achieve accuracy. Grant access to designated teams so they can access the information they need when necessary. It’s more efficient to collect, assess, and visualize numbers when you use inventory management software. Schedule orders with ease to update your stocks and identify which items are top sellers. Monitoring inventory levels is also smoother with the right tools.

These inventory management best practices boost the efficiency of your operations. These practices also simplify the scheduling of orders and monitoring of stock levels. If you need to update your accounting books, we at Robookkeeper can provide you with first-rate services. We have a team that provides reliable and trusted outsourced bookkeeping services.