No matter how long your business has been around, there are always ways to cut down on excess inventory and boost sales.
Certain issues can make managing supplies more difficult, such as broken equipment or expired stock.
Whether it’s tracking purchase orders or pricing new products, each piece of the puzzle of inventory management comes with obstacles you’ll need to sidestep.
Properly predicting what supplies you’ll need and how many can be tricky. If you do it wrong, you’ll either be left with excess stock, or you won’t have the items customers want.
Neither of those situations is ideal. Running out of supplies makes you look unprofessional and leaves customers unhappy. Meanwhile, having too many can lead to lost revenue.
However, with the right tools, you can improve forecasting and avoid getting stuck between a rock and a hard place.
When doing projected sales calculations for inventory management, you’ll want to look at-
- historical sales figures
- market trends
- guaranteed sales from contracts or subscriptions
- predicted growth and the economy
- marketing efforts
If you use an enterprise resource planning (ERP) system, many of these stats are stored there and can be compiled into reports and predictions to help fine-tune your forecasting.
If you don’t use an ERP solution, you may want to look into purchasing one with inventory management capabilities, so you can use real-time sales analytics to track what you have, and how it compares to sales.
Equipment malfunctions are unavoidable. Things break, and sometimes there’s nothing you can do but wait for someone to come and fix them.
You want to try and manage equipment breakdowns as efficiently as possible to make sure your inventory doesn’t end up seriously affected.
Even if the equipment isn’t directly related to inventory management, a bump in one part of the process leads to delays in others and causes confusion, often resulting in inventory mistakes down the line.
Regularly monitor essential machinery and its parts so you can be aware of potential issues before they take down your entire system. You may also want to consider investing in a CMMS system solution to track the status and health of your inventory.
In addition to consistent monitoring, build and maintain good relationships with maintenance technicians. Whether they work for the machine’s vendor, or you have to find them separately, nurture those partnerships. A positive relationship could mean having your machine fixed or getting a new part in a day instead of a week.
Depending on what products your business sells, spoilage and dead stock can significantly impact your inventory and profits.
For perishable items like food or makeup, you need to make sure you have a firm timeline for selling them. Having to throw out stock because it’s expired is a waste and leads to lost profits. Inventory management software can help solve the problem of spoilage because it alerts you when things are close to going bad.
What about items that don’t have an expiration date? Products that go out of style or become obsolete may not have an actual sell-by date, but it still becomes harder and harder to sell them as time goes on. Once they’ve gone out of style, they become dead stock - and your company doesn’t want those products on hand taking up valuable space any longer.
This is where the “first in, first out” principle of inventory management becomes important. This process works as it sounds—the oldest stock gets sold first to make sure that previously ordered items aren’t piling up and forgotten about.
To avoid spoilage or dead stock, implement an organization system at your warehouse or storage facility where the older stock is consistently moved to the front so it can be easily accessed.
Another key, be aware of sizing and space requirements as you add new stock. If there’s a product that isn’t selling much but takes up a lot of space, you’ll want to know how to store it to make sure other products aren’t forgotten or lost in the shuffle.
You also want to keep seasonal stock in mind and organize your facility accordingly so older products aren’t accidentally forgotten.
Any business that sells products is at risk of theft, and you likely already have strategies for dealing with it. Double-checking your methods is always a good idea since thieves often look for small security lapses they can use to their advantage.
To deter both shoplifters and employees from stealing, consider using radio frequency identification (RFID) tags to track products with your inventory management software. You’ll be alerted to any unauthorized movements of product and can make sure your inventory is secure.
In addition, implement security controls at your warehouse or storage facility. Limit access to just essential employees, and monitor who enters and exits the area.
Regularly spot-checking inventory can also help alert you to any stock inconsistencies that could be the result of theft. Every so often, consider choosing a random product to count. That way, if any numbers are off, you’ll know something’s gone wrong and can work to fix it. Thieves won’t be able to track when these spot-checks occur, which makes it harder for them to get away with theft.
All these issues can be avoided with a thorough inventory management solution or an ERP system that does the heavy lifting for you. You can customize the database for your organization to focus on your specific pain points.
Written by Kelsey Ketchum
Kelsy Ketchum is an editor for Better Buys, helping companies find and select the right software solution. She enjoys writing about medical coding, human resources, and safety compliance.