An Indian management study looking into ways of saving company’s money found that implementing basic inventory management systems increased profits and reduced waste, which resulted in overall savings.
If you feel that inventory management is an area within your company that could be improved, here are five simple solutions that you should look to implement:
Prioritise Inventory Management
The Pareto principle, also known as the 80/20 rule, states that, for many instances, 80% of effects come from 20% of the causes. In this instance, it would say that 80% of your profits come from 20% of your items.
With this in mind, you should focus your inventory management efforts on the products that generate the most profit for your business. If you are limited to how much inventory you can purchase due to financial restraints or limited space, for example, buy what you are selling the most of or what has the best profit margin. Try not to waste time managing products which have little impact on your business unless you have the available time to do so.
Use a Point of Sale System
Using an effective EPoS system is a great way of maintaining inventory management. By having a system that automatically tracks sales as they happen while deducting sold items from inventory is something which every business should consider.
Good EPoS software should process all popular payment methods, which allows you to sell more items due to customers being processed faster. Why not take a look at how our point of sale inventory software can benefit your business?
Track Inventory Levels for Incoming Items
Instead of just tracking what you have on hand and how much you sell, you should track inventory levels and turnover rates. Don’t tie up your money in raw materials that you won’t need for months if the turnover rate is slow. Instead, consider allowing the inventory level to drop as you sell it, which will free up money for other uses. If turnover rates are falling, don’t buy anything else, and don’t buy more of a product that takes months or years to sell.
Include Expiration Information in Your Data
Improving inventory management data on when products go bad helps to reduce your losses from products becoming unsellable. You should also consider tracking seasonal products, as this gives you the information you need to know what items should be marked down on sale. By doing this, you have a greater chance of selling those items instead of paying to store them for a long time.
Have Backup Plans
If your main supplier cannot provide you with what you need in time to meet your requirements, have backup sources so that you can meet customer demand. You should research in advance where you can sell products that aren’t performing well or vendors who will buy failed product lines, so you can clear it out quickly and get money for it if you are unable to sell them.
You should also consider using cloud backups of your inventory management so that if hardware or local servers go down, you can still gain access to what you require to keep things running as they should.
These are just five ways that you can easily improve your inventory management. If you think there any methods we have missed, please let us know on our social media channels.