5 Strategies For Efficient Business Inventory Management Any business requires different types of assets to continue operating. However, inv...

5 Strategies For Efficient Business Inventory Management

Any business requires different types of assets to continue operating. However, inventories are the most important assets. Why? Because inventories have a high liquidity level. Liquidity here means that it’s easy to convert stock to cash compared to other assets.

Inventory also refers to all items or goods held by a business for sale in order to generate revenues. However, to help generate the desired revenues, you must manage your stock.

This article walks you through some simple yet effective strategies for inventory management. But before diving into these strategies, you first need to understand the nature of inventory management. 

What Is Inventory Management?

Inventory management is the process of keeping your stocked goods to the required level. It involves tracking stock items to ensure that the right products are in the right place and at the right time.  

Inventory management also involves how you make orders, handle, as well as store and sell your stock. Effective inventory management strategy ensures you don’t run out of stock and, at the same time, you don’t have slow-moving items. 

However, to ensure your inventory management strategy is working, you can consider working with an order fulfillment company. Order fulfillment companies can be responsible for shipping, storage, or returning excess goods to the supplier. 

How Can You Ensure An Efficient Business Inventory Management?

Inventory management systems play a major role in the success of any business. For instance, a better inventory management system in place can help improve the accuracy of orders, more organized warehouse, and helps save time and money. All these go a long way in increasing business efficiency and production, thus ensuring customers are fully satisfied.

With that said, here are some strategies you can implement to ensure you have efficient business inventory management: 

1. Just In Time Inventory Management

Just in time inventory management is an effective strategy that requires you to order and stock what’s only needed by customers. For instance, if the current demand for product X is 1,000 units, this approach requires you to make an order of not more than 1,000 units. 

There are several benefits of adopting this strategy when managing your inventory. First, it ensures you save on storage space. The saved space can be used for other productive business activities. By adopting this strategy, you can also move to a smaller space, helping save on rental costs. Another benefit is that it ensures you don’t hold your capital on the stock, which allows your business to remain afloat. Lastly, it ensures you reduce wastes since you'll only be ordering the goods that customers need. 

2. Use Inventory Management Software

While you might think you can manage your inventories manually, sometimes, the process can be complex, especially as your business expands. So, you need to have a system in place that allows you to track your inventories more efficiently. That’s where inventory management software comes in.  

Inventory management software allows you to monitor your stock from the moment you receive them to when you sell them. Also, with inventory management software, you can scan products barcodes when receiving them. So, rather than receiving the ordered items manually, you can use your software to receive them into your system. This helps increase your accuracy and also saves time.

3. Perform Regular Audits

Inventory audit refers to the physical verification of stocks to ensure that it matches with the computerized data. There are several reasons why you need to audit your stock. One of the major reasons is that audit can help you find any discrepancy between your physical inventory and what’s recorded in the books or computer systems. 

Another benefit is that you’ll be able to identify breakages, dead stocks, and slow movers. Having this information at your disposal can allow you to improve or adjust your inventory management system. For instance, you can remove the breakages from your system or return the deadstock and slow movers to your supplier. This ensures your stock doesn’t hold your capital. 

4. Track Sales

Tracking your sales is another strategy that can help you manage your inventory more effectively. Effectively tracking sales can help predict future sales. The ability to predict future sales is important because no business owner would want to over-purchase or under-purchase products for sale.

There are many factors to consider when predicting your sales. Some of these factors include the season of the year, economic conditions, political conditions, marketing efforts, weather, etc. With such information, you can forecast your sales more accurately. 

With sale prediction, you can establish minimum and maximum stock policies to ensure you don’t overstock or understock. 

5. First-In, First-Out

First-in, first-out is a stock inventory management strategy most applicable to perishable and goods with expiry dates. Just as it sounds, the first-in, first-out approach ensures that the first items to get in are also the first ones to get out. This ensures products don’t become obsolete or expired in your store, which can cause a lot of loss to your business. 

Takeaway

The success of modern businesses is greatly dependent on inventory management. Efficient inventory management allows you to deliver better customer service. With better customer service, you can attract more customers, which helps you stay ahead of the competition.