Inventory management is considered one of the most difficult skills to master. There are so many aspects to keep track of. Some of these include:

• Stock levels
• Customer demand,
• Obsolete inventory and excess inventory
• Seasonal products and inventory turnover ratio
• Storage space
• Supply chain management and sales channels
• Cost of inventory
• Product types
• Accurate forecasting and effective stock control
• Demand forecasting
• The right inventory management software
• Customer satisfaction
• and so much more.

As a retailer or other business owner, you definitely understand just how much effort it requires, especially if you don’t have the right systems and tools.

Inventory management can take up a lot of your time. And it will definitely affect your revenue. It is crucial that you find out how to successfully manage your inventory to avoid stress, streamline workflow, and save money. However, there is no need to worry, since, today, we’ll take a close look at 12 tips for effective inventory management. Here’s how you can handle your inventory more effectively.

1. Organize the Storehouses

To make sure that everything is properly handled, you first need to organize your warehouses. It is necessary for the continuity of your infrastructure and business strategy. As you might already know, disorganization can lead to stock getting lost or supply movement getting backed up. 

It is vital that you go through your storehouses and strive to ensure that everything is in its right place, rotated for date, and moving according to your schedule and plan. Moreover, this will also make it possible for you to find out if something has been missing and minimize the risk of theft. Also, your team will have what they need to succeed when they see a high level of organization and efficiency in your storehouses. 

2. Monitor Regional Demand

Next, you have to keep an eye on the regional demand for all your products. This will allow you to find out which products are in high demand and which might need adjustment because of declining numbers.

Then, you can order products that are in greater demand to avoid a stockout situation. As for the products that are not as popular, you can simply store them until demand increases.Technology has come a long way and should be used for managing regional demand. The inventory management process is much improved by the right tools. You can even turn to data analysis to anticipate demand and customer buying trends. 

3. Establish Effective Stock Reorder Points

One tip you cannot overlook is setting effective stock reorder points. Each product should have a safety stock level set to avoid a stock-out situation. You will have to perform the write-offs and claims on a daily basis so that suggested orders are always accurate.

You must never forget about seasonal products. Make necessary adjustments to safety stock when the season changes to accommodate these changes according to both past figures and current, changing trends. For instance, the demand for soups increases during winter and drops in the summer.

4. Consider Training for Better Inventory Management

In order to improve your inventory management skills, seek training. Developing an effective inventory management system requires a strong understanding of the basics and the different tools that are available.

A lack of training could prevent your organization from meeting its objectives and keep you from growing your business and your income. The fact is that you need to know about the latest improvements to be able to get ahead. Otherwise, it is easy to make mistakes and overlook inefficiencies.

It is worth it to seek inventory management training. It will introduce you to new concepts and theories while reminding you of time-honored concepts. Consider taking an online course, an in-person class, or learning from a mentor.

5. Focus on Loss Prevention

Loss-prevention management should be top of mind for you. It all comes down to centralized systemic redistribution. Every good that makes its way into the storehouse should be monitored so that losses are minimized. It will help improve inventory outcomes.

You must never take loss prevention lightly. By having effective checks on a regular basis, you will eliminate losses and improve overall security. Losses from theft are a major spot of vulnerability for many companies, and they can really dig into profitability and customer satisfaction. Do everything you can to refine your loss prevention strategy.

6. Unite the Team

If you want to ensure effective inventory management, you are going to need to bring everyone together. When the entire team is in sync, there are fewer chances of encountering inventory issues. Everything will be a lot easier when everyone is on the same page. It will decrease the number of misunderstandings, communication breakdowns, errors, internal conflicts, workflow inefficiencies, and so much more.

There are several ways to encourage and lead team unity. Consider more effective strategies and comprehensive training, along with weekend workshops, better training for your supervisors, and equipping your team with better communication habits and tools for working together more seamlessly.

7. Use the Right Technologies

Inventory management has come a long way. Today, there are many inventory management systems that organizations can use for managing stock and workflow. To get started, you require an effective inventory management system as well as bar coding. These will allow you to manage nearly all aspects of inventory control and movement with greater precision and organization.

Make sure to evaluate the different technologies that are available today, to ensure that you use a system that is equipped with the latest features. However, it can be overwhelming at first to choose which technologies to use. Find out what other strong agencies are using, read valuable reviews, talk to other business owners you trust, and discuss options with respected inventory experts. 

8. Improve the Receiving Processes

A great way to improve inventory management is to optimize the receiving processes. This will ensure that you have no trouble managing your bottleneck. It is vital that you identify repeat mistakes and eliminate them for good. Pinpoint week spots, slow areas, and redundancies so you can refine your workflow. On top of this, you must perform a quarterly check and a weekly partial inventory count to stay on the safe side.

9. Hire Top Talent

One secret to managing your stock better is to hire the right people. Your inventory management team must create effective processes to avoid inconsistencies. Therefore, it is in your best interest to spend more on talent. It will allow you to attract only the best employees. However, you also have to focus on choosing honest people to avoid losses.

The fact is that even the most effective loss-prevention processes have their limitations and cannot always deter theft. This is why it makes sense to perform background checks before you recruit anyone. Also, perform ongoing training to ensure they remain as professionally fit and ready for any challenge.

Make sure you hire the best receiving managers and clerks you can find, those with experience, drive, wisdom, technological know-how, good time management, and the ability to train and lead. The results will amaze you once you improve your receiving process.

10. Manage Dead Stock Effectively

No matter how careful you are at managing your inventory, you are likely to come across dead stock. Dead stock is non-selling stock, items that don’t move. No matter what industry you’re in, you will probably face this problem at one point or another.

It is important that you create an exit strategy in order to deal with it. Although you might think that you will never encounter such a situation, it is always better to have things planned out. Consider clearance sales, selling it to other businesses at a discount, those who do have a history of selling these same items, or giving donating them to help others and to benefit from tax deductions 

11. Create the Best Team

Hiring the right people is not enough. Building the right team is about continual training, mentorship, bringing in new talent when needed, providing each member with the right tools and technology, opening better lines of communication and collaboration between departments, and more. 

12. Never Force Stock Orders

Lastly, focus on order accuracy. Study available data, order history, seasonality, current and future trends, and weigh these against available funds, storage, and company objectives, to order products that people really want to buy. Continue to place orders for items that sell well to avoid accumulating stock.

Experimenting with new products is a good thing. But you can’t do it too often. You need a solid core that customers can count on, products that consistently bring in a solid income for you. Then, you can try out a new product now and then to see what might fit. 

In Closing

Inventory management is an important skill to master, worthy of your time, training, and considerable effort. Follow these tips to improve your process and always reach out for help and advice from those with more experience in this area. Control your numbers but don’t make choices out of fear. Make them from a place of knowledge, accurate data, thoughtful consideration, innovation, and common sense. 

Healthy inventory management practices will increase your cash-flow, get you organized, improve productivity, and positively impact several other parts of your business. 

Sound accounts helps businesses refine their processes, improve money management, and stay organized with top quality bookkeeping support. Connect with us today to find out how much better life can be with an experienced bookkeeping team on your side. 

To learn more about inventory management, check out our frequently asked questions below. 

FAQ

What are the 5 steps to an effective inventory system?

In order to get your inventory right, you have to follow the steps mentioned below.

• Determine the types of stock you need
• Liquidate the stock
• Organize your inventory
• Account for fluctuations in stock
• Make cycle counts

How does inventory management save time?

Although inventory management might seem like a lot of work initially, it helps you save time by ensuring that you stay in the know about everything. Making informed decisions and putting together the right practices, technologies, and team members in one place, and leading them effectively, will go a long way to maximizing your resources and talent. This will energize your business growth. 

What is the best way to manage inventory?

When it comes to managing inventory, the best method that you need to use is FIFO (First-In, First-Out). It is widely used by just about every organization and is easy to implement. As the name suggests, you will make sure that the first item that makes its way to your storehouse is the first one out the door. 

This protects you from out-of-date issues, internal conflict, disorganization, and more.