3 Proven tips to help you learn how to manage inventory effectively
These three expert tips will show you how to manage inventory effectively and save money.
Do you know how to manage inventory? Inventory management is one of the biggest problems that inventory-based companies face. It certainly does not help that this issue can quickly become unmanageable as the business starts growing and expanding its product portfolio.
Think about the piles of stock that are lying in your warehouses right now. You will begin to see how poor stock management can affect your company’s profits negatively. Unmoved inventory represents working capital that your business could have used to run other parts of its operations.
Taking stock and clearing out idle inventory should be a regular part of your company processes. That is why learning how to manage inventory effectively should be a top priority for your business.
However, it is important to recognize that your efforts can be affected by certain factors. For instance, activities such as sales, procurement, and manufacturing can impact your inventory directly. It can also be influenced by outside forces such as dynamic trends and changes in the economy. While you could certainly study and predict some of these impacts, most are much harder to manage.
Three tips that will help you learn how to manage inventory effectively
Inventory managers must be able to take all these unique factors into account and develop an effective way to administer the company’s inventory. Here are three proven tips that will help you learn how to keep your inventory in check.
1. Keep lean stock
Your primary goal should be to keep the volume of stock down. However, it should not be so lean that you are unable to react should the market shift suddenly. The latter scenario is likely to stunt your company’s growth and diminish the customers’ trust in your brand. You should always have enough stock to fulfill immediate demand while leaving sufficient room for growth. Logistical issues will always arise, so striking a balance between the two is vital.
Learning how to manage your inventory will also bring down your operating costs. A lot of stock will also need a lot of warehousing space, which adds massive costs to the company. It sounds quite straightforward, right? However, good inventory management is not just about ironing out problems with the logistics.
2. Sort out the lines of funding
The need to learn how to keep your inventory lean enough to meet just the short term needs of the business has already been established. This approach is also a great way to free up your working capital for use in other operational requirements. You can also boost the amount of available cash flow by making the most out of the lines of credit that are available to you.
Banks offer a lot of funding assistance to help companies out with imports and inventory. These lines of funding are particularly cheap and effective. They enable businesses to evolve from tying up working capital in stock.
3. How to manage inventory effectively using technology
Keeping low stock levels also helps you avoid being caught with dead inventory. ‘Dead inventory’ is stock that is out of date, out of fashion, or out of condition. This kind of stock must eventually be written off as a loss. If such stock aging is left to run rampant, it can easily lead even the most successful business to insolvency.
However, you can use inventory management software to keep your numbers in check. Even the most basic accounting packages can perform this function. The unique needs of your business will determine how sophisticated the program you choose will be. The main point is that current technology can help you manage inventory and predict the effect of market forces on its demand and value.
The final word
Studies have shown that small companies spend a lot of their finances on supplies, technology, and maintenance every year. However, learning how to manage inventory effectively can cut down these costs dramatically. The best way to accomplish this is by using a quality inventory control system to manage all your processes.
Talk to an expert to find the best quality inventory control system for your business.