Does your business often experience stockouts or overstocking? The problem likely lies in inventory control. Managing inventory can be daunting, but it’s necessary to prevent overstocking & stockouts, reduce waste, and boost your business profitability.
Today, we’ll share seven tips for achieving effective inventory control. From accurate forecasting to implementing an ERP system to automate inventory management, these tips will help you optimize your inventory control processes and improve your bottom line.
- Use Accurate Forecasting Methods
Accurate forecasting is the foundation of effective inventory control. With data analysis and market trends, you can determine the optimal inventory levels for all your sales channels. This ensures you have enough stock on hand to meet customer demand without overstocking, which can lead to increased costs and decreased profitability.
But how can you make your forecasting more accurate? Consider utilizing a demand forecasting system that uses algorithms to predict future demand based on historical data. This system can provide real-time insights into market trends and help you adjust inventory levels accordingly.
- Implement a Cycle Counting System
Cycle counting is a process of regularly counting a portion of the inventory to help guarantee accuracy. Simply put, it involves counting a small percentage of inventory each day, week, or month—rather than shutting down operations to perform a full physical inventory count. This helps ensure inventory levels are accurate and prevent costly stockouts or overstocking.
An automated cycle counting system that uses barcode scanners or RFID technology can optimize the process. With such a system, your staff can save time and reduce human errors, allowing them to maintain accurate inventory levels without interrupting operations.
- Set Reorder Points and Lead Times
What’s another key factor in maintaining optimal inventory levels? It’s setting reorder points and lead times. Reorder points indicate the minimum inventory level at which you should reorder a product. On the other hand, lead times specify how long it takes to receive the product after placing a purchase order.
Consider using an inventory management system that can provide real-time data on inventory levels and lead times to set your reorder points more effectively. Look for a system or software app that can automatically generate purchase orders when inventory levels fall below the reorder point, ensuring enough stock is on hand to meet customer demand.
- Categorize Inventory Items
Feeling overwhelmed? How should you prioritize your inventory management efforts? Start by categorizing inventory items based on demand, profitability, and other factors. That way, you can focus on managing the most critical inventory items first & optimizing your process.
Use any system that allows assigning categories and tags to each item. But a system that provides real-time data on inventory levels and demand for each category will be better! That way, you don’t only get to categorize items but also make better-informed decisions about inventory management.
- Implement a First-In, First-Out (FIFO) System
There’s a reason the first-in, first-out (FIFO) system is considered a traditionally reliable system. It helps ensure older inventory items are used or sold before newer items. In turn, it prevents waste and guarantees you’re always selling the freshest products to customers.
How to implement a modernized FIFO system? Switch to an inventory management system that tracks inventory by lot or batch number. This system can ensure that older inventory items are used or sold before newer items, reducing waste and boosting profitability.
- Implement Safety Stock Levels
Safety stock levels are additional inventory levels maintained to meet unexpected increases in demand or delays in supply. You can implement safety stock levels before a holiday rush or big sale. That way, stockouts won’t happen, and you could keep customers happy.
But how can you determine the safety stock levels for each item? This is where an inventory management system steps in. It can help you calculate safety stock levels based on historical data and market trends, so you can have enough stock when it’s needed the most.
- Use an ERP System to Automate Inventory Management
Want an app or system that allows you to implement all the tips above? Use an ERP system.
Using an ERP system to automate inventory management can streamline your inventory control processes and boost accuracy. More importantly, an ERP system can integrate with other business systems, such as sales and purchasing, to provide real-time data on inventory levels, demand, and lead times. It can also automate tasks like cycle counting, purchase order generation, and inventory tracking, saving time and reducing errors.
Try Kentro Today
Looking for an ERP system to use? Give Kentro a try. It offers a robust inventory management solution that provides real-time inventory tracking, historical data, tracking individual lot numbers, listing updates, and many other streamlined processes. It also provides seamless integration between order processing & fulfillment for efficient operations. Simply put, it eliminates the need to do manual counts and deal with multiple spreadsheets.
Try Kentro today. Book a demo to get started.