Inventory management may not be the most exciting part of running a business, but it’s crucial to keeping your company profitable. But how can you make sure not to over-order items? What’s the perfect stock level to meet your customer’s expectations? And how can you track your shop’s inventory in multiple locations in real time? These may sound like a lot of work, but you can handle them with the following inventory management tips.
- Categorize your inventory.
Categorizing your items into priority groups is key to effective inventory management. It helps you understand which products you need to order more of and more frequently & which items may cost more when they move slowly or get stuck in your warehouse. Typically, it’s recommended to categorize your products into three groups: A, B, & C.
Group A should include high-ticket items you don’t want to hold in your inventory for a long time because they can impact your business’s cash flow. Lower-cost items that turn over quickly should be in Group C. Group B is the category for in-between items: they are moderately priced products that move more slowly than C items but faster than A items.
- Monitor sales closely.
It’s not just about adding up your sales at the end of the day. You should also monitor your sales data closely. Which items are fast-moving? Do you know when certain products sell faster? Do some items often sell together? When you understand the big picture of your sales data, you can be better at keeping your inventory under control. You can categorize your inventory into three groups efficiently—just like how we discussed in the tip above.
- Create a consistent process on how to receive new stock.
Do you have a standard process for the incoming stock? Or does each employee receive and process new stock differently? When there’s no standard and consistent process for incoming stock, you could end up with numbers that don’t align with your purchase orders. Those minor discrepancies could turn into inefficient stock reporting and cause your shop (especially if it’s e-commerce) to oversell. And that can lead to customer dissatisfaction.
So if you want to refine your inventory management, create a consistent process on how all your staff should receive new stock. All new boxes must be verified, accurately counted, and unpacked & checked for accuracy before reporting them.
- Track supplier performance.
A supplier that is habitually late with deliveries or inconsistent with the orders can negatively impact your inventory. So it’s crucial to track supplier performance. Talk to suppliers once they commit a mistake for the second or third time. Discuss the issue and see if you can trust they won’t make the same mistake again. Otherwise, be prepared to switch suppliers, as you don’t want to deal with uncertain stock levels frequently.
- Plan for emergencies.
While the goal is to keep stock at the right levels, there will be times the demand outstrips supply. It’s vital to plan for such situations. You can start by budgeting for rush shipping fees and looking for extra suppliers that can cater to you in case of urgent situations. That way, you can accommodate your customers and serve them excellently all year round.
- Ditch the spreadsheets & invest in modern ERP.
Spreadsheets require manual data entry, so it’s prone to human error. They also don’t integrate easily with other systems, like e-commerce selling platforms. On the other hand, automated systems can make your inventory management easier and more efficient. A modern Enterprise Resource Planning (ERP) software like Kentro even allows you to manage aspects of your business, including inventory, sales & logistics, on a single platform.
With Kentro, you can ditch manual counting and spreadsheets. You can rely on inventory logs, historical data, and real-time tracking to forecast the demand for your products. This software also helps seamlessly integrate your order processing & fulfillment, which lowers the risk of overselling. Your listings will be automatically updated, too, based on what you sell in real-time and how many stocks you recently received. In other words, Kentro will simplify your inventory management to help your small or mid-sized business thrive even more.