As businesses grow and the demands for their products increases, inventory management isn’t going to get anymore fun-filled. There are plenty of companies that have lost billions of dollars due to the mismanagement of inventory.
Inaccuracies and inefficiencies in inventory management will not only harm your business’s productivity but is also a matter of losing or retaining your customers. From underestimating the space needed for goods storage to wrongly determining which commodity is facing a shortage, several variables can lead to embarrassing mishaps.
Although having a robust inventory management software program can significantly cut down the difficulties with expansion, there are many other things you can do to make it seamless. Here are five hacks that make inventory management a piece of cake.
Create Well-Defined Item Descriptions
This might seem really obvious, but in fact, many businesses overlook this step. When in a rush, many companies may get into the practice of naming products using tags or labels that may seem relevant at the time but will be soon forgotten.
This will not only make it harder to retrieve information but will also confuse co-workers. As a best practice, it is best advised to have clear names and definite descriptions, so that anyone who reads it can quickly pinpoint what you are referring to.
You can also make use of name templates which can look something like “Year_Model_Color_Vendor” or something that makes sense to your product line. By having a template, information retrieval will be much more efficient, and more importantly, the inventory management system will be more structured.
Conduct Regular Inventory Inspections
Conducting regular inventory inspections are an excellent way to spot minor mistakes before they turn into major inconveniences. You can set the duration between each inspection cycles, and perform it in a per-week or per-month basis.
Even though such inspections are performed using the inventory management software, by tracking down and recording the stock of each product, you can also try for a physical inventory inspection method.
Physically inspecting means manually counting the quantity of every product you have. Of course, this will be nearly impossible for big companies to do, and can be advisable for small-scale businesses, that too probably once in a year.
Another way you can do this is by performing a spot check. By this method, you randomly choose a product and look into its existing count, and inspect on its supply and demand.
Similarly, you can also utilize the cycle count method in which you will systematically look into the inventory balances of each product. You can decide the frequency for it by looking at the number of products you have.
Use The FIFO Method
The First In, First Out (FIFO) method, as the name implies, means that the stocks that came in earlier will be sold first. Following such a practice will make sure there is a healthy rotation among your product batches, and no new versions are sold too early, or old ones too late.
Opposite to this is the LIFO method, which sells the latest stocks first. Even though many businesses are still following the LIFO method, it is best advised to stick to the FIFO method.
The FIFO method will be especially useful is you deal with perishable items. As the oldest products are sold first, it will ensure you don’t hold any goods that are not worth selling or obsolete. This will also make sure the stocks never sit idle or gather wears and tears in the process.
If you are yet to implement the FIFO method in your warehouse, you will need a significant rearrangement on how the goods are processed and moved. You must make sure that the new products are added to the back of the warehouse, making sure the old ones stay in front.
Use Fleet Management Systems
Your inventory management system is as good as how your products are transported. You may have an in-house transportation team to deliver your goods or a transportation partner for the same. In either case, utilizing fleet management systems will significantly reduce the confusions that can arise.
With the help of fleet management software, you can effortlessly pinpoint the exact location of your assets and precisely estimate their delivery time. This will undoubtedly make inventory management more efficient and predictable.
If you have an in-house transportation team, you can use a fleet management software program to streamline their operations. If you rely on a third-party transportation service provider, you can link your inventory management system with their fleet management software, depending on how flexible the software is.
If you are keen to know more about what is fleet management software and how it works, find out here.
Be Prepared For Emergencies
There are can several instances in which the demand may significantly succeed the supply rates. In such situations, you will have to oversell your product and to be able to do that, you will have to predict such situations (like holiday sales) and stock-up accordingly.
Similarly, seasonal demands will mean you need to store more products. In such cases, you must ensure your warehouse capacity is flexible enough to meet such variability. If you fail to find the required space, you can think of cutting down the storage of least-performing products or rent extra space for the time being.
Regardless of any emergencies you face, especially in the case of increased demands, you must make sure you try to counter such situations proactively. By doing so, customers will be more inclined to do business with you in the future, as you were able to provide for them at the least expected time.
One of the most effective ways to manage your inventory effectively is by predicting when and where your product will have the most demand. The five hacks discussed in this article will surely give you an upper hand to efficient inventory management.
With the use of fleet management systems, you will see a tremendous amount of increase in your inventory management efficiency, and more importantly, you get to prime your business for better revenue generation.