Inventory management is easier said than done. This is especially true if your business involves a manual overview of the tasks involved. Effective inventory management is key to running a profitable and efficient business. So with that in mind keeping spreadsheets are no longer an option; you need robust inventory management software that provides you with a suite of tools to help keep your business organized and maintain the growth.
Start with your data and reports
It is not possible for smaller organizations to effectively leverage large amounts of inventory data as it incurs a lot of financial investment. Today using the inventory management tool, it is much easier to collect all your data, aggregate it, and gain useful insights. Also using your own data can let you learn more about your future requirements
2. Transfer management
Enterprise business with multiple sites to move their products has the advantage of moving it where it seems most profitable. You can bundle products that are mostly used together by customers and offer them discounts during certain times of year. To handle this, you need a system that is capable of effective transfer management.
Inventory tool lets you track your inventory while it moves through different sites and facilitates the overall transfer process. Some modules offer you specialized systems like voice picking at the venues to reduce any confusion among your workforce and streamline their efforts.
3. Learn your ABCs
To maximize the overall turnover and to increase your profitability, you need information about which inventory to prioritize. Not all products are equally popular and have the same demand.
ABC inventory management strategy keeps the products in the top three categories based on their values to your business. The strategy is adopted from the Pareto principle, where 80% of the revenue comes from just 20% of your product line.
ABC can be further explained as follow:
- A: High-value items (70%) that are smaller in number (10%)
- B: Moderate value items (20%) that are moderate in number (20%)
- C Small value items (10%) that are available in a large number (70%)
Mostly this strategy increases the profitability of your business, but it can also increase the market share through increased gross sales.
4. Forecast demand
With times like these, there are no universal standards, so the demands can keep fluctuating, which is why it is hard to optimize the inventory for the right product.
Traditionally it is tough to predict accurate demand forecast with an extensive line of products, multiple sales channels, price changes, promotional offerings, and external factors like seasonable changes have made it very difficult to paint an accurate picture of future growth.
If you rely on spreadsheets and other manual tools, it will be a nightmare for you to go through a ton of historical data. However, the introduction of machine learning and artificial intelligence into inventory management tools have certainly made it possible for businesses of any size to forecast demands
5. Automate as much as possible mjupo
To improve workflow efficiency and lower human dependencies, it is essential to increase automation. Automation substantially reduces the need for manual labors and uses technology; most of the central workflow is organized.
Automating certain parts of your inventory management frees up more of your workforce and increases productivity and efficiency. Mckinsey’s report predicts that automation in production can accelerate the global economy by between 0.8% to 1.4% of global GDP annually.
6. Track by the expiry date
From raw material to finished goods, it is necessary to keep track of all your products’ expiry date. It allows us to see how long the product has before it expires.
Here are several critical reasons to keep track of expiry dates:
- Avoidance of internal spoilage
- Allows you to identify which batch to sell first
- Ensures that you are selling goods well within their sell dates
- Remove specific quantities that can no longer be sold.
7. Follow FIFO or LIFO
In the accounting discipline, FIFO means first-in, first-out. As the name implies, it suggests that whatever product comes in your inventory first has to move out early. LIFO is similar, and it indicates that last in, first-out, which means the products that came last need to be moved first.
If you have perishable goods, then FIFO is a necessity. Otherwise, the inventory will be spoiled and have to write off as a loss.
For non-perishable goods, LIFO is an obvious option because this way, you don’t have to rearrange the product and rotate batches. If you sell both types of items side-by-side, you’ll have to figure out a mixed approach.