If you own a small business, you need to pay close attention to your inventory. Ecommerce management software will help you monitor stock levels and keep your business running smoothly. Unfortunately, inventory management isn’t straightforward. It involves various processes, and many things can go wrong if you aren’t careful. This article explores some of the best ways to manage store inventory to help you avoid the pitfalls associated with poor inventory management.
Inventory Management: What is it and Why it’s Important
Inventory management is a component of supply chain management that looks at how much stock is available at hand and when to replenish it.
Effective inventory management can ensure you have the right products in the right quantity at any given time. As a result, it can prevent products from running out of stock. It can also ensure perishable goods are sold in good time and prevent excess stock from occupying too much space in a warehouse.
Tips for Effective Inventory Management
Implementing a robust store inventory control system is integral to the success of small businesses. Here are five tips on managing store inventory effectively.
1. Categorize Your Inventory
Putting your inventory into groups can help you distinguish between fast-moving and slow-moving items. As a rule of thumb, experts usually recommend categorizing your inventory into A, B, and C categories. Place higher-value items you don’t need in large quantities into the A category. Meanwhile, place inexpensive items that move quickly in the C category. Finally, place moderately priced items that move faster than items in category A but slower than those in C in the B category.
2. Use an Appropriate Inventory Control Method
There isn’t a universal way to control inventory. What’s suitable for one business may be unsuitable for yours. Identify an inventory control method that’s suitable for your business. Generally, FIFO (first-in, first-out) is the inventory control method used by most businesses. As the name suggests, it involves selling the inventory that was brought in first. If you run a business that stocks perishable products, the FIFO approach is undoubtedly the best inventory control method for your business.
3. Audit Your Inventory
Even with a robust warehouse management system, you’ll still need to physically check your inventory to ensure what’s present matches what your system indicates. Many businesses usually do a thorough audit annually, while others may perform a biannual, quarterly, monthly, weekly, or even daily physical count. No matter the nature of your business, ensure you perform at least one physical count every year to get a visual representation of what you have in stock and address any stocking issues.
4. Identify Slow-Moving Stock
Low-turn stock can affect profitability by wasting space and capital. If you identify an item that’s been in stock for over six months, consider running a special promotion or discount to sell it or transfer it to another outlet where it might sell faster.
5. Invest in Inventory Management Software
As a small business owner, you may keep track of your inventory using spreadsheets. But as your business expands, using spreadsheets may become tedious and inefficient. Good inventory management software like Lightspeed can help smoothen inventory management and save you time and money.
Good inventory management can help you improve your bottom line. Use these five inventory management tips to manage your inventory and grow your business.