inventory management strategies

10 Inventory Management Strategies to Transform Your Business

Most retail businesses nowadays have an online presence. As balance sheet assets go, inventory is often the largest item. Getting inventory levels right is a challenge. Ensuring that the right items are in the most convenient location can be a headache. Preventing shortages and keeping shipping costs down can also be a problem. Managers face the challenge of implementing effective inventory management strategies. This helps to increase sales, grow profits and give great customer service. Here are 10 inventory management strategies that will help you achieve this.

1. The Basics: Supply and Demand

Having the right quantities of stock at hand is vital. Supply and demand can help you determine what is the right amount to carry. Customer satisfaction is key. A customer who keeps getting “out of stock” messages is likely to vote with their feet and move to a competitor.

Constant awareness of what is in stock and what needs replenishing is a must. This reduces chances of running out of an item or having dead stock.

2. Efficient Use of Technology

An up-to-date, automated inventory management system is a necessity. The business team should have access to information they need to make decisions. Automation also allows for the system to place orders for certain items.

This reduces labor and storage costs by keeping stocks at optimal levels.

3. Supply Chain Monitoring

The inventory management system should watch suppliers, internal operations and order processing. Stocks should arrive on time, in the correct quantities and at the right location.

The company can spot and change inefficient suppliers. An efficient and effective supply chain has a direct effect on the cost of doing business. The system ensures that the right labor is at the right location and at the time required.

4. Use Tablets

Tablets have become a big part of doing business. They allow the team to communicate. Tablets are also more versatile in its functions.

Inventory management software is often bundled with tablets. The software is often in sync with the system in real time, especially when it is cloud-based. Users have access to data that affects their part of the business. This makes it possible to have seamless operations. These web-based interfaces are easy to implement and simple to use.

5. Data Analysis

Inventory management is no longer a simple clerical activity. Use both computerized and human analysts to process data to help in decision making.

This data affects forward-planning. Purchasing, storage space, transportation, labor costs – virtually the entire business is affected. These operations must be optimized if the business is to maintain and grow sales volumes.

6. Drop Shipping

Many online stores make good sales without having inventory of their own. Setting up the right systems and keeping a close watch on activity is key. Some inventory management systems have direct integrations with platforms like Shopify for drop shipping. This is a great way to introduce more movement in your inventory.

Drop shipping allows a business to have a bigger variety of items at the best locations. With diligent management, these stores are exposed to less risk.

7. Continuous Production, Order and Stock Safety Calculation

The larger the stock level a business has, the more important it is to always be aware of stock levels. The calculations should be done regularly and continuously, preferably on a daily basis.

A few hours can make a huge difference. Being able to react quickly improves efficiency and sales performance.

8. Dead or Slow-Moving Stock

Dead and slow stock is an expense any business tries to avoid. The business has already paid for the stock, and it occupies expensive storage space. There should be a strategy in place to deal with this eventuality should it arise. This could involve discounting the stock by having off-season sales, for example.

The business could also have sale-or-return deals with suppliers. In this way, some items are only kept in stock for specific periods.

Management should also look into the causes of stock being slow or dead. Come up with ways of dealing with it; a product may be obsolete. Remember, new products enter the market daily. Keep in touch with what the competition is up to. Constant improvement can help reduce the occurrence of dead or slow-moving stock items.

9. Optimizing Production and Storage Space

It is important for a business that space is not wasted. Space costs money and inefficient use of it can make a hole in a business’s finances. A slotted warehouse layout is a good example. Goods are placed closer to loading docks in order of priority. Staff should be able to locate items quickly and predictably. Such a system also helps in identifying slow or dead stock.

This, in turn, affects ordering and production schedules. Factory floors should also be laid out in such a way that problems are quickly identified and solved. Parts and spares should be within easy reach and at the right location.

10. Continuous Improvement

With a smoothly-running system in place, it is easy for management to get complacent. This should be avoided at all costs. Systems should be analyzed regularly and changes made as necessary, with minimal delays. Good relations and constant communication with suppliers should be maintained.

Internally, managers should be on good terms with employees. Motivation is key when dealing with people. This can be enhanced by establishing and maintaining a good working environment. Access to information is an important factor. Of course, different levels of access and control for your inventory should be established. Some staff may be allowed to change certain parts of the data, while others may only be able to see the data.

A good system should allow continuous monitoring and improvement. As the company grows, so does the amount of data it generates. This can easily spin out of control if it is not under constant monitoring and review.

Choose Strong Inventory Management Strategies

Modern business management requires effective inventory management strategies. Identifying and setting up such systems is a specialized task. These ERP systems automate business processes, from production or ordering to delivery.

They allow the business to plan for the future and make decisions in good time. All in all, the bottom line is to have happy, satisfied customers. As the old business saying goes, “The customer is always right!”. If you’d like to learn more about how to maximize your business potential, our blog will set you on the right path.