The task of inventory management might look easy, but in real it’s not. Maintaining and management of inventory is not just about knowing how much stock you have in your inventory for sale, rather the task is much more comprehensive and includes many aspects. Inventory management is related to checking up on the quality of stock, and encompassing proper accounting of it. Every small detail must be present with the manager in hand, be it about quality, quantity, price, sales etc. Inventory management is also about forecasting, which requires manager to have broader understanding about the future business environment and market conditions. Hence with this reference, in this article we will talk about what an effective inventory management is all about and how it is achieved.
- Understand the future demand– Being futuristic is the key element for effective inventory management. This can be done by gathering relevant data that will help you to identity the demand for goods in future. Some key parameters like, checking up on historical data, changing market trends, change in technology and seasonal variations will help you to locate the demand for your goods in future. Moreover, consider the factors like climate change or weather conditions as well, noting these factors is important to protect your goods from adverse climatic effect. Hence, as a small business you need to be thorough with your research, so that every investment you do in goods is worth. Proper forecasting will help you to manage and organize your inventory well, this will lead you towards gaining significant increment in sales.
- Discard low-return stock– Frequent inventory checkup is important to maintain goods that have potential to bring you profit. There can be certain goods in inventory that are no longer of any use, and they have lost their potential for sales. Thus, discard goods that are obsolete, damaged or do not possess any demand, and make space for ones that have potential to get you profits. The ability to identify low-return stock helps inventory managers to replace them with raw material useful for the production of necessary goods. For example, if you see a product that has deteriorated demand or languishes on the shelf, then it’s time to replace it. Moreover, avoid spending for additional efforts to promote goods that are no longer in demand, you can clear out these goods through consign surplus stock, and instead use that money for other productive purpose. In this ay by analyzing low moving stock and replacing them during early stage is good to save your business from future loss. You can effectively utilize time and resources for goods that will have higher demand in future.
- Keep check on quality– The most important task of inventory management is paying close attention to quality of the stock. Quality of products is necessary to build strong market position, and this give people solid reason to choose you among different providers. Hence, frequent quality inspection of the goods is necessary throughout the product’s lifecycle. Make a team of skilled workers who have ability to check the goods with rapt attention, starting from production to final packaging. Thus, embedding quality control in every aspect of inventory management will ensure that your goods meet quality standards. Also, this is to make sure that every worker does his/her job with full attention and honesty, to avoid missing out on good’s quality. The goods must be properly checked from inside out before exporting them to retailer. Finally, it’s not only about quality check at a single stage but maintaining quality at all stages of production, the customer should get the best high-quality product and that is the responsibility of an inventory manager.
- Use POS to track your sales– POS refers to point of sale technology that helps you to track inventory of your business in real time. POS tracks the record of inventory level after the sale of products. This is basically helpful to avoid shortage of inventory and to make sure that inventory has significant quantity of goods. Align your POS system with your inventory management system to help you locate the incoming and outgoing of stocks. For instance, if you have exported 100 tons of goods for sale, then this quantity will be recorded in POS technology, now through POS you can check, whether or not after giving out 100 tons of goods your inventory is in deficit. This way you will be able to maintain inventory with ample amount of goods to avoid unnecessary break in sales. Moreover, using better integrated techniques for managing stock prevents the data entry errors that might occur. With fully automated system, there is a surety that the data you have in your hand is accurate.
- Make use of POs– POs is for purchase orders, this is to track whether or not the orders are placed with right vendors or suppliers. Purchase order offers thorough detail about the product, when it was purchased, with whom, at what price and in what quantity. When the goods are received by inventory managers, they are crossed checked with purchase order to ensure the received goods matches with purchase order description. The product description states the right order is received, in right quantity and the price charged in the invoice is correct. Hence, in this way purchase order plays significant role in receiving goods accurately.
Effective management of inventory is helpful to save time and resources of the business, and boost sales. Proper inventory management organizes your inventory well, it ensures that you have what is necessary that too in the best quality and abundance. The right inventory system automates every process related to inventory, it tracks incoming and outgoing of goods in accurate quantity. In this way you get real time data to make further purchases. Moreover, with the use of POS technology you can keep your essential data safe and accurate. Finally, maintaining POs is also beneficial to check that the stock you have is exact and precise. Following these steps lead to appropriate inventory management.