10 ways to better inventory management
Not having full visibility over your real-time stock position can have a significant impact on your cash position, customer satisfaction and your ability to make agile, data-driven decisions. For many retailers, however, inventory management isn’t receiving the focus it needs.
By implementing the right strategies, tactics and systems that help you manage inventory more efficiently, your profitability and business growth can be accelerated. Here are the top 10 ways to unlock your business growth through better inventory management.
1. Regular stocktakes
It sounds simple but stocktakes are often overlooked. A stocktake will give you an accurate baseline of what’s in stock as well as components, kits and assemblies, raw materials and finished goods. For retailers with a large amount of stock, a barcode scanning system can be a huge time-saver.
2. Identify the fast and slow movers
Once you’ve run a stocktake and have a clear picture of your inventory, it’s time to identify which stock is moving quickly and which stock needs a shakeup to get it out the door. After all, the slow-moving stock is what’s really costing you. Retailers with a lot of slow-moving stock can experience reduced cash flow, depreciating stock value and a lack of valuable store-shelf and warehouse space which could instead be filled with more popular, fast-moving items.
3. Set up reporting
If you’re not already running regular reporting on your inventory, you should be. You’ll want to understand the demand and profitability across different product lines, average lead times to ensure you’re ordering what you need well in advance, costs associated such as landed costs for imported products, and more.
Trying to manage everything using spreadsheets can be a challenge. If you don’t already have an inventory management or ERP system in place, it may be time to look at options.
4. Identify trends
The same items that are flying out the door today might start dragging their heels in another six months. Setting up regular reporting can uncover trends and give you more insight into your business and your industry. Google Analytics can help you monitor trends across your website and inventory management software can help you identify and anticipate changes in stock demand.
5. Understand your customer
Are some of your products popular in some geographic areas, but not others? And if that’s the case, have you thought about targeting your marketing efforts based on region or other factors?
Once you get to know who’s buying which products, you can also think about consolidating your supplier freight costs. If you have a good idea of how many of your products will be bought by customers on a regular basis, you can order a larger shipment of that stock less frequently.
6. Get your suppliers in order
When you start thinking about stock movement, you’ll undoubtedly start thinking of the other factors which impact your overall inventory management situation. For example, are your suppliers taking a week to deliver stock which flies out the door the next day due to popularity? Are they delivering to you on time and as promised, with complete shipments and without missing items or components? Managing your supplier relationships can have a big impact on your stock delivery.
7. Create a reliable receipting process
A common issue for warehouse staff is the receipt of deliveries which don’t match what’s been ordered.
Make sure your warehouse staff know to check the incoming stock against the related orders, rather than just assuming it’s all correct. If you have a receipting process in place, this can go a long way to ensuring your stock is correct as it comes in.
8. Develop a labelling system
As your storeroom or warehouse grows, it can become more chaotic and difficult to pick and pack your items. For optimal inventory management, you need a good system and the right processes in place.
Make sure your item locations are labelled clearly. You want your staff to find items easily and pick and pack in the shortest time possible. Less time in the day spent picking items means more items that can be picked, packed and shipped out.
9. Make some physical efficiency changes
Are your most popular products located at the back of the store or your warehouse? For stores, you want those popular products at the front to attract more customers. For your warehouse, you can save your staff a lot of time by moving your high-demand products closer to your where the pick, pack, ship process is completed.
10. Fight disaster with data
If your premises burned down tomorrow, would you have a record of the amount of stock you had and its value? Your insurance company would want to know this type of information. So it’s crucial to have a reliable system that can provide detailed records and reports.[
Stephen Canning is the CEO of cloud solution provider JCurve Solutions. He has experience in strategic, business and operational planning, including product and go-to-market strategies. Contact: www.jcurvesolutions.com