Complete Guide to Effective Inventory Management

Inventory management forms the foundation of businesses. It would not be wrong to say that your inventory management process can either make or break your business. The process usually includes stocking, ordering the products and materials for the smooth functioning of the business. If you don’t know how to manage your inventory in an effective way, then this guide for you. Keep reading further to each and everything about inventory management! 

A reliable inventory management software is a need for every business. 

As mentioned above, inventory management plays a very important role in deciding the profitability of a business. Every business regardless of its size should pay extra attention to its stock management. Still, there are many businesses, especially the smaller ones that don’t carry out good management which reflects in their performance.

Thankfully, there is powerful inventory management software available in the market that makes inventory management a breeze. All you have to do is find and leverage the full capabilities of such tools and software. 

Useful Tips For Managing Your Inventory 

Below are the most useful tips that will help you manage your inventory in an easy and efficient way for increased revenue generation and profitability. 

1. Make Inventory Management A Priority 

Instead of paying the least attention, make inventory management your top priority. By grouping the inventory into different priority groups, you can understand which items you need to stock more frequently. This can be easily done by taking into account the profitability, popularity and demand of the products.

Experts usually recommend categorizing the inventory into A, B and C slots. Items in the A category are the high-cost items that you need in a few numbers. Similarly, the items in the C category are low-cost items that get exhausted very quickly. But the middle group, that is the B group, contains the most affordable and preferred items that move out slowly than the C group but quicker than the A group. 

2. Monitor Complete Product Information 

Keeping the track of product information of all the items in your inventory is very important. This information includes details like lot numbers, barcode data, countries of origin, suppliers, SKUs, etc. If possible, you should also consider monitoring the cost of items from time to time to remain aware of the factors affecting their cost and demand. These factors include market trends, seasons, scarcity and so on. 

3. Perform Regular Audits 

There are businesses that perform audits annually, which is not a very good practice. Others do the same monthly, weekly or even daily. While there is no need for performing daily audits, you should do a comprehensive count once or twice depending upon the size and type of your business. When you do so, make sure that your results match your expectations. 

4. Keep An Eye Out For Suppliers 

Most inventory management problems arise because of working with the wrong and unreliable suppliers. If you’re dealing with a supplier who delivers late and often shorts the orders, it’s time to find another supplier. It’s always better to keep multiple trusted suppliers at your disposal, who will make sure to keep your business up and running without letting your inventory crash. 

5. Follow 80/20 Rule 

The 80/20 inventory rule implies that 80% of your total profits should be made from 20% of your stock. Therefore, pay special attention to the items that fall into this 20% category. For this, it is very important to learn and understand the sales lifecycle of the important items including how many of them are sold in a month. These are the items that bring the most profits, so make sure they always stay in stock. 

6. Monitor Sales Performance 

While this tip may not look very important, it plays a very important role. Tracking sales isn’t only about adding everything at the end of the week or month. You should have a deep knowledge of how many items you’ve sold and what category they fall in.

Apart from this, you should also analyze the product data to know which items are selling faster or slowly, what are the factors affecting their sales, what are the days that result in bumper or poor sales, etc. By keeping an understanding of all these factors, you can take a broader picture of your inventory in your account, which will eventually help you keep the management controlled and seamless. 

7. Invest In Right Inventory Management Software 

Last but not the least, invest in the right inventory management software. Understand that, managing the inventory is a crucial and responsible task that is very difficult to perform manually. Offline inventory management is error-prone, time-consuming and inefficient in this digital world. Not just that, it also raises many security threats in your business.

So, the best idea is to search and deploy the right inventory management tool that is easy to use and efficient. And while you’re at it, download this inventory management software. It is safe, easy to use and affordable as well. 

By following these tips, you can make your inventory management process easy, error-free and highly efficient.