Most of the small businesses work in retail, and if that’s you, then it’s imperative that you have an effective and smart inventory management in place in order to drive efficiency and minimize shipping time.
Like so many other elements of running your own business, inventory management can be a challenge, so here’s 10 business tips for Smart Inventory Management:
- Analyze – It’s all in the upkeep. Keep an eye on your operations, regularly analyse your warehouse activity, and keep up to date with stock movement, Just because you start off organised, doesn’t mean you’ll stay that way. Appoint an employee, manager – whoever – to be responsible for inventory across the company, this does not have to be a full time job.
- Consistency – Make sure your item descriptions are clear, unique and well defined as to avoid confusion. It’s easy to mix up your stock when you have items with similar names and descriptions, making it hard to locate items when searching through your inventory. Having a consistent naming system will help with this, for example PRODUCT NAME – SKU CODE – COLOUR – PRICE or something more similar or relevant to your business needs.
- Put Systems in Place – Having SKU numbers and barcodes can help with this, as they ensure every item has a different ID number – a stock keeping unit (SKU) – so that they’re easier to find, especially if time is of the essence. You should really have a system in place for listing your products, including the following below that will be the most basic needs for your product:
- Product name
- SKU code
- UPC description
You can then go on to add other details, such as weight, dimensions, colour etc depending on your business. The more detailed they are, the better and easier it will be for you and your team to identify and replenish the product.
- Reality Trends – Identify what moved and when. Doing this on a daily basis will help identify which products are and are not selling well, so you can discount the ones which sell poorly and replace them with more effective stock. Having this historic view of stock movement also help identify missing stock and what might have happened to it. Keep things real and change inventory accordingly.
- Keep Top Sellers at the Top – Stock up on those high sellers and make sure these are never low on stock, so you can avoid disappointing your customers and also affecting your profit and bottom line. Remember, top sellers always at the top!
- Loyalty – Identify who orders what and when. Work out who your main key customers are, what demographic caters to your business the most and which one of the customers buy the most and how many repeat customers you have. This way, you can ensure their favourite products are in stock for them – if you know they’re going to buy, it’s a good idea to have the items readily in stock so you can keep them in stock for immediate purchase or ship them quicker. Catering to their needs keep your loyalty higher.
- Gut Check – Remember, nothing is more important than a gut check in your business. If you see something changing, react and go with your gut. This also helps in forecasting your sales and ensures you’re ordering enough to meet the demand, but not over-ordering. Remember – it’s important to keep business moving but not to over order with perishable products, or those that may go out of fashion. Always take a gut check and see if it feels right when you are ordering more for prediction of higher sales or for ordering way too much.
- Track Everything – Make a log when you make an order with a supplier, this is commonly called creating a “Purchase Order”, so when your supplier sends you the order, you can check against the purchase that you received everything your ordered. This makes sure that you do not get overcharged by the supplier and you are getting the right stock on time.
- Automate Business – In this ever changing world, you definitely need to automate your systems. Take advantage of your suppliers inventory, so rather than keeping every item in your warehouse or on your website in stock, see if your supplier can drop ship stock direct to your clients, this could reduce the amount of inventory you need to keep and save on shipping hassles and keep cash in hand for other business needs. So automate your business, start with dropshipping with your key suppliers.
- Technology – Internet and progress of technology has made this world flat. Having a software system that keeps track of your inventory can make it infinitely easier for you to manage your inventory, providing you with in-depth reports into your activity, saving you time when shipping and give you a detailed overview of what is happening with your inventory and who did what, when. So use latest technology software and keep your inventory management in check to help you thrive in your business.
There you have it, real world tips for smart inventory management. Remember, the ultimate reason for doing this is to have more Cash available for your business to make right investments and to always be on top of your business. So take the time to evaluate your current inventory management now and implement these above ideas to keep your business healthy and wealthy.