Inventory management is always a top priority for large and small retailers. Too much inventory means less space for fresh stock. Too little inventory means disappointed customers are walking away empty-handed. And once profits and customers are lost, there is no guarantee of getting it back. So what do you think is the solution? Finding the perfect balance between supply and demand is never easy. That’s why we’ve compiled a list of inventory management tips from leading experts in the retail industry. With a little help and the right tools, you’ll manage these inventory levels like a pro in no time.
This article will cover some useful tips and the best methods for controlling and managing inventory efficiently.
Why is inventory control so essential?
Inventory management is an important function for companies in all industries. Without effective inventory management methods, the supply chain will run into problems, unable to adequately meet customer needs, and ultimately the company’s bottom line will reflect these deficiencies.
However, choosing appropriate inventory management methods and developing effective policies are important. This ensures processes are adhered to, and inventory accuracy is improved. It also ensures that collected data is accurate. You can also figure out other areas of your company. Then address the concerns and provide comprehensive solutions.
For this reason, assessing a company’s current business case to identify key requirements, select a system, and develop the process that best fits its unique needs is often an inventory management system. It is a necessary first step for companies applying. We also recommend that companies conduct these audits regularly to ensure that their current systems and processes are adequate, given the growth and changes within their organizations.
Inventory control methods
An efficient inventory control method is the solution for an efficient inventory management system. There are several inventory control methods available. You need to analyze which method suits you best for you. This depends on the type, size, and objectives of your business. Some of the common inventory controls are mentioned below:-
The Min-Max method
The min/max inventory method is a reordering strategy that sets a reorder trigger when a minimum level is reached. Then order what you need to reach the top or new stock after ordering. The difference between the maximum and minimum levels is the Economic Order Quantity (EOQ). The min/max model is one of the earliest replenishment models but is less sophisticated. The advantage is that this method is simple and makes balancing inventory much easier. The disadvantage is that its simplicity can cause problems as you may over-order items or run out of them before they arrive.
This is one of the most common methods used throughout the retail industry. It is sometimes combined with other methods to improve inventory management. This inventory classification technique classifies products based on how much they contribute to sales and how important they are in assortment planning.
Vendor Managed Inventory (VMI) is the inventory managed by a vendor, i.e., a supplier. Of course, there may be more, but at least your provider will decide when and how much to refill. Vendor-managed inventory has been around for a long time and is much more common than you think. For example, if you’ve ever worked in a cafe, a bread person will visit the café daily and check how much bread they need to refill. Here, the one who manages the inventory is the one who controls every aspect of it.
Just- in- Time inventory
JIT is a form of inventory management that requires working closely with suppliers to ensure that raw materials arrive at the scheduled production start time. The goal is to minimize available inventory to meet demand. JIT inventory ensures you have enough to produce just what you need when you need it.
This helps you achieve high-volume production with minimal inventory and reduce waste. JIT inventory management ensures that inventory arrives when needed to meet production or consumer demand, but not sooner. JITs often require long-term contracts with reliable suppliers because the main goal is quality, not the lowest price.
Best inventory control tips for your business
Digitize your inventory systems
No doubt, retailers can manually track their goods. Inventory counts are important, but they are also cumbersome and error-prone. A manual inventory process can lead to these errors. Even if you run a small retail store, it’s wise to use an automated system to track your inventory. This saves you time. Also, you get real-time details about inventory levels, top performers, etc. Products that can be scanned or barcoded to track merchandise.
The total cost must reflect the actual cost of production
Having the best inventory is obvious. However, having the right amount of high-performing products and brands is essential too. Maximizing sales of high-margin products can be difficult. So a careful look at total costs can help you sell the fastest and know which products have the best margins.
A centralized data source
When your data is not centralized, a lot of disasters can strike. It will lead to a lot of chaos and confusion. It may also lead to work errors and unorganized data. A centralized data source can help you keep track of your inventory. You can also get live updates about your stock situations. It can give you complete control over every aspect of your business.
Shrinkage of inventory
Shrinkage, or loss of inventory due to theft or damage, can be controlled in several ways. Shoplifting can be a problem, but poor inventory tracking often leads to more serious problems. You can track your inventory with your POS system. This can provide accurate reports through analytics that can be used to identify shrinkage.
Get rid of the old and stockpiled inventors.y
Stockpiled inventory levels can eat up valuable space, especially seasonal items that have been in stock for months. This can affect cash flow and lead to liquidity issues. Consider using up this inventory in some other way. Recycle, sell or reuse them, so they are not losing their worth sitting around for months or even years.
Get organized and standardize your system.m
Technology is important, but even the best inventory management software in the world cannot make up for a disorganized system. However, you can find and update product details by standardizing how you track and sort your inventory. This includes current inventory levels, costs, and descriptions more quickly. And when it’s time for a new product, you know when new inventory needs to be entered into the system. A standardized system also means that you get cleaner data for prediction.
Provide adequate staff to employees
Understanding inventory management software and standardization systems is important, but so are your employees. You can’t be everywhere and do everything. Also, you probably won’t be on the floor when the store opens. Therefore, employees must be well-trained. This will ensure they don’t make work-related errors.
How SWIL can help provide clarity into your inventory control process
Proper inventory management can determine the success or failure of your business, and constant visibility into your inventory is essential to success. However, regardless of the inventory management process, decision-makers need the right tools to manage their inventory effectively. SWIL provides robust software technology for tracking inventory across multiple locations, determining to reorder points, and managing safety stock and cycle counts. In addition, use demand planning and sales demand planning features to find the right balance of supply and demand across your organization.
Sometimes a well-planned inventory management system alone can take your business to the next level. An inventory control system helps you manage your business with features that make it easy to track, manage, and order complex inventory.
Want to know how our inventory tools can help you manage your inventory levels and improve your profit margins? Contact us today!