Inventory management is the art and science of storing and ordering a business’s inventory. The process includes handling raw materials, finished products, and other components. So, there’s no doubting the fact that managing inventory is imperative for businesses in retail and manufacturing sectors where bulk goods are ordered or produced. Effective inventory management allows you to save money by understanding the product demand and stock needs.
Moreover, it helps maintain a good relationship with suppliers and keep your customers happy with timely deliveries. Let’s explore some ways to manage your inventory effectively.
1. Create A Sourcing Strategy
Sourcing is crucial for maximizing profits and maintaining a good supply chain. Your sourcing strategy should be built on a solid list of suppliers and manufacturers from whom you can reliably buy raw materials or products.
The strategy will help you to short-list reliable suppliers who will ensure the seamless supply of goods. Moreover, a good sourcing strategy will help you build a healthy long-term relationship with your supplier.
2. Define Storage Methods
Businesses operating on a large scale can store the inventory in their warehouse. While medium and small-scale enterprises often use third-party logistics (3PL) and warehouses to keep their stock. Either way, businesses need a pre-defined storage strategy for storing inventory.
Your storage strategy can include all the tools, techniques, and compliances needed to store your inventory safely. This should help you to establish a quick response delivery system for order delivery and restocking.
3. Create An Inventory identification System
Inventory identification allows you to track, monitor, and identify inventory. When dealing with bulk stock, keeping track of the right products is often difficult. The best tactic is to use SKU, UPC, or EAN codes to control inventory.
These codes can help identify the inventory status and improve product delivery and restocking. The unique codes can help to identify the following metrics about a product:
- Internal supplier
- Handling and packaging
- Supplier UPC
It’s also a good idea to create unique SKU codes for your inventory management system which align with your inventory needs.
4. Conduct Data Collection And Analysis
Data is necessary to maintain the supply chain, orders, and deliveries. It can directly affect the business’s profit margins and gives them a competitive edge. You can use digital tools and techniques to monitor order velocity and market demand.
The data obtained will be highly beneficial for prioritizing the product restocking according to demand. Lack of data and market knowledge will burden you with excess inventory resulting in losses.
5. Use Digital Tools and Automation
The manual inventory management methods cannot keep up with the bulk orders and cannot track them. Furthermore, there are more chances of errors and omissions in handling the inventory manually.
By adopting modern inventory management methods, you can have an automated system that will allow you to use less workforce and reduce errors and mistakes, eventually achieving high ROIs and profit margins.
With the help of the above methods, you can achieve a high success rate and scale your business. Use one tactic at a time, or use them collectively depending on your needs.