Implementing new processes can be a challenge for any business, but learning how to control stock inventory can be particularly tricky. A successful business will aim to reduce as much wastage as possible by anticipating its customers’ requirements.
Over ordering on stock that is not sold, can impact heavily on profits and ties up capital that could be used elsewhere. Figuring out early on how to control inventory, is key to running a successful business. So, how do we do it?
Starting Points on How to Control Stock Inventory
The first step is to make a detailed assessment of your inventory. This should include a complete overview of your current systems to make sure that they are keeping track of your stock effectively, monitoring stock level changes, and that they include flags indicating when to reorder. A good initial assessment will provide the foundations for a great new system and highlight key areas to show you how to control inventory management in your business.
How to Control Stock Inventory Using Specialized Software
Many people are probably aware of inventory management software but are unsure how to choose the right system for their business. Learning how to control stock inventory via specialized software can be daunting – but the benefits are huge. Just make sure you do your research and find the right software for you. They all have different features, and it is important to find the right fit.
There are a number of accounting packages that have inventory management built in already, which is a great way of keeping a central point of control for your business.
Think of it as a Posh List
How can inventory be controlled effectively? There needs to be accurate and up to date records kept of all stock. It is important that stock is easily identified and that stock levels are tracked. This can be done manually but as a business grows, employing inventory management software can make this task much easier!
Manual checks can include physically counting stock, and or, performing visual inspections to ensure there is no noticeable damage or items obviously missing. It is important to choose a period during which you measure your inventory, for example, over a week, and record all new purchases and sales over that period.
These figures should then be kept in case you want to look back at a particular period. It is also important to cross-check your manual figures with your software data to make sure everything is accurate.
When Should a Point of Sale System be Introduced?
There is no right answer to this, but as a business grows, a point of sale system will give you up to date inventory figures which can help ensure stock levels are maintained. It is now even possible for point of sale systems to automatically update your accounting records.
How to Control Stock Inventory Using Sales Forecasting
To run a successful business, you need to have enough stock to satisfy demand. Sales forecasting based on past figures is a great method if your business has been running long enough. If you don’t have the luxury of historical data, then looking at your competitors and using knowledge from your contacts or customers, is a good start.
Your sales forecast can then guide you in the stock levels you should aim to maintain. This is particularly important if you have limited space, or if your goods are perishable. If on the other hand, you have a huge warehouse and non-perishable goods, discount bulk buying is a great cost-saving exercise.
It is important to factor in how long in advance you have to order your stock, and how long it will take to arrive. It can be useful to order slightly more of stock which has a long lead time, to ensure you can always fulfill orders.
Another important factor when considering how to control inventory is establishing at what point more stock should be ordered. Many businesses would set a flag at a minimum level, and when this is reached, an order would be made. This process may need to be periodically reviewed if you have a seasonal business. Seasonal businesses may also find it useful to keep some buffer stock in case there is an unexpected level of demand.
Should I Outsource My Inventory Management?
The final point to consider is whether your business would benefit from outsourcing its inventory management to an outside agency. These companies are sometimes used by large retailers who are managing a large amount of stock and find it useful to employ a specialized team to help with the big question of “how to control store inventory.”
Talk to an expert to help you make these important decisions.