In the previous post, we saw a few tips for inventory management. Let’s continue where we left off and jump to the next tips.
Don’t leave the order restocking to someone else
Take charge of your reorders rather than leaving that to merchants. Future revenue forecasts and consumer demand tracking are both improved. Additionally, inventory management software that establishes automatic reorder points and provides up-to-date sales history can be useful.
Managing your own orders can save time, guarantee you have the products on hand to fulfill consumer demand, and help you better manage your warehouse space by having the right quantity of inventory on your shelves, even though it could entail extra work for you.
Regular audits
Understanding inventory levels is the first step toward effective management, which requires counting your inventory initially. What are the advantages of an inventory audit, and how do you go about performing one?
When auditing your inventory, start by comparing what is actually on hand to what is displayed in your program. Either you or a third party can carry out the audit. A complete audit examines other performance indicators, such as your inventory turnover ratio and your inventory expenses, in comparison to historical patterns, in addition to only a physical count.
An inventory audit enables you to monitor shrinkage and identify areas for improvement, such as receiving inefficiencies.
Understanding EOQ
The ideal order quantity (EOQ) is the number of items that your business should buy to have just enough on hand to satisfy consumer demand. When dealing with a product that sells quickly, you’ll want a lot of it and need less of the more expensive, slower-moving ones. However, velocity—how rapidly things sell—is not the sole factor.
The EOQ varies according to how much it costs to make, ship, store, and handle the item. Learn to adjust EOQ, and you’ll be able to buy less inventory overall, maximizing profit while minimizing handling and storage expenses.
Setting par levels
The least amount of stock you can have before placing another order is called a par level.
When determining your par level, you should factor in the typical amount of units consumed during a specified time period, sometimes a quarter. The next consideration is safety stock for demand peaks.
The benefit of par levels is that once established; you don’t need to make difficult decisions; all you have to do is keep track of your inventory. Par levels, though, aren’t fixed in stone. You might need to update your products if their velocity changes or if seasonality is present.
Collect accurate data for analytics
Utilizing data from a variety of sources, inventory managers optimize their warehouse storage, expenses, and processing times. Examples include things like picking levels, lot numbers, SKUs, and supplier information.
By keeping track of this data, you may build a priceless data repository that will serve as the basis for your analytics practice. You can reliably create, track, and save this information with inventory management software that integrates with UPC scanners and other RFID devices to reduce the need for manual data entry.
Additionally, that software can assist in serving data insights using easily readable dashboards showing measurements and KPIs for inventory management.
So, these were the tips for inventory management. For bigger inventories, it can get tough to manage everything by yourself; that is when inventory management systems can be used.