Inventory management is an integral part of a business’s processes. It is basically a discipline specifying the shape and placement of stocked goods or products. More than that, however, it is a systematic approach to obtaining, storing, recording, and profiting from non-capital assets, such as raw materials and finished goods.
As it is a crucial aspect of a business’s profitability, effective management practices should be set in place. Some businesses, however, employ little time and effort into properly managing their inventory, which usually result in dead stock or profit losses.
That said, below are five practical tips on how you can implement effective inventory management for the good of your business.
1. Sort and prioritize your inventory.
When it comes to inventory, the best practice is to sort your stocks and know how to prioritize them. This means knowing which supplies you need to order more frequently. At the same time, you need to know which goods are essential to your business but are rather costly and move slowly. From there, you can go ahead and segregate your inventory into groups based on the priority to give you a more streamlined inventory process.
2. Monitor all product information.
Inventory management is an effective method to track your product information. You have to make sure that you keep a record of details of all your products. These details include the SKUs, barcode data, suppliers, countries of origin, and lot numbers, among others. It’s best as well to keep track of the cost of each item so that you can monitor the change in price based on season, demand, and scarcity.
3. Conduct regular audit of inventory.
Having regular audits of inventory is paramount for the business’s growth. This entails a spot check of all items performed on a daily, weekly, and monthly basis. Keep in mind that you should physically count your inventory. The goal is to make sure that your inventory matches what products you have initially purchased and utilized. From there, you’ll be able to discover any discrepancies with the inventory and address the problem as soon as possible.
4. Record and track your sales.
Part and parcel of your inventory have to do with tracking and monitoring sales. This doesn’t necessarily involve just adding up sales at the end of the day. The practice of monitoring sales transactions entails understanding what and how many items have been sold. This includes analyzing your sales and data information, which are crucial in making sound business decisions.
5. Utilize inventory management technology.
Inventory management should be a robust approach that will make a significant difference in your inventory. Sure, you may be using spreadsheets and notebooks and manually tracking goods, as a small-scale business, but you might actually want to consider adopting a Point of Sale App with inventory management capabilities to make all your tasks and life much easier.
The answer to inventory management lies in how you work and plan in achieving an efficient management process. It won’t hurt to follow the practical tips outlined above. All these essential tips will help you effectively manage your inventory for increased profitability and consistent cash flow management for the benefit of your business.