Inventory can make or break a business. Run out of a popular product, and you’re losing money. Buy too much of what won’t sell, and you’ve lost money, too. Waste time searching for inventory or outright the loose items, and it will cost you in a variety of ways. This is why inventory management is essential to maximizing the profitability of your business. Here are four ways to instantly improve your inventory management.
Maintain Your Accounting Records
Accounting and inventory are closely linked. Get in the habit of tracking your orders as you place them, and track inventory as it is received. Keep up with orders and sales, reducing inventory counts as you ship or sell items.
If you put off updates of accounting records, you could end up with incorrect inventory information in the accounting system or waste money duplicating purchases. By updating inventory purchases, uses, and sales at least once at the end of the day, you’ll have relatively accurate information at any given time. This doesn’t eliminate the task of audits or the occasional full inventory, but reduces the need for it.
Set Up Barcode Scanning
Barcode scanning has a number of benefits. You can automatically track sales by product and restock the shelves before they are bare. Higher end barcode scanning software supports mobile barcode scanning.
Your team will be able to scan the items on the shelves, in the return bin, and on the warehouse shelves, and you’ll generate accurate inventory reports with minimal effort or mistakes. For example, barcode scanning eliminates mistakes when inputting SKUs or unit counts. A fair number of barcode scanning software programs will both incorporate existing barcodes and let you generate new ones so you can implement barcode scanning for the first time.
Determine Your Ideal Inventory Level
An inventory level is how much you want to have in stock to ensure you can meet customer demand before you can replenish inventory. The ideal inventory level can be calculated based on sales rates with some margin for spikes in sales or delays in supplier deliveries.
You should calculate your ideal inventory level so that you don’t sink too much money into inventory that could be used elsewhere in the business. By knowing the ideal inventory level, you won’t waste money overstocking inventory and then maintaining it. Once you’ve determined that ideal level, you can calculate the ideal lot size to order from the supplier to minimize both the per unit cost and procurement labor involved.
Don’t Forget Inventory Quality
It isn’t enough to have 1000 units in stock. They need to be of the right quality to sell if you plan on earning as much as planned off the sale. This is why inventory quality must be maintained. If they ship you the wrong product, ship it back immediately rather than letting it sit until you decide to try to move it. If they ship you a defective product, return it or get your money back. Don’t let inventory sit in the warehouse so long that it is impossible to sell, either. This could be because it degraded or because it is simply so dated that it can only sell on the discount shelf.
Inventory is expensive, and maintaining it requires effort. Anything you can do to streamline operations without falling short is worth the effort. Explore all of your options, because it all improves the bottom line.