Taking Stock of Your Inventory Management Techniques: 10 Tips for Improving

10 Essential Tips for Improving Your Inventory Management Techniques

Improving your inventory management techniques is essential for streamlining your business as well as handling loss prevention. To learn how to improve your techniques, click here.

Did you know that inventory shrinkage costs the U.S. retail industry over $45 billion each year?

Retail crime and internal theft haven’t slowed down and it can cripple a business. For these reasons, it’s vital to know your inventory.

Improving your inventory management techniques is essential for streamlining your business as well as handling loss prevention. Check out ten tips for improving your inventory control methods.

What Is Inventory Management?

Inventory management is a way to track all the goods that a business has in stock. By managing inventory, a business can keep tabs on what products they have, how many they have sold, and what things they need.

It’s vital to have an effective inventory management method in place. The last thing you want is to have orders come in that you can’t fulfill because you didn’t take proper inventory. You also don’t want to have a surplus of certain products just sitting on the shelves that don’t sell.

When you have proper inventory control methods for your business, you’re able to analyze sales patterns, predict future sales, stay profitable, and minimize cost.

1. Use Multiple Vendors

One tip to improve your business’s inventory management is to use multiple vendors if possible. Obviously, if this becomes an ethical issue, don’t do it, but if you can, use multiple vendors for the same product to ensure that you don’t run out.

2. Renegotiate

Speaking of your vendors, you can check with them and see if you can renegotiate your prices. It certainly never hurts to ask. Assuming that you have a high volume of sales, your vendors will most likely agree to a renegotiation in order to keep your business.

3. Consider Dropshipping

Do you use drop shipping? Have you ever considering implementing it into your business plan?

Drop shipping can reduce your costs and improve the service and efficiency of your business. You won’t have to keep inventory in-house, nor would you have to deal with product shipping.

You will want to monitor this closely though as some drop shipping companies aren’t as dependable as others. However, if you find a great company that provides this service, it can be a game changer for your business.

Find great suppliers and have suppliers on standby to make sure you have smooth drop shipping experience.

4. Regular Auditing

Do you do audits regularly? Regular auditing can be an important inventory management technique. Depending on how much inventory you actually have, this could be a tedious and stressful job. Some businesses do year-end audits. Others do random audits.

Regardless of whether you do an audit of all inventory at once or you do one product a week, your business will benefit from making sure all your numbers add up.

A perfectly balanced inventory is necessary in order to make the most profit. To find this balance, you need to enlist the help of professionals like inFlow.

5. Prepare a Contingency Plan

Benjamin Franklin said that “by failing to prepare, you are preparing to fail”. The fact is, problems will occur. Your best shot at dealing with them is to be prepared for them. You can do this by preparing a contingency plan.

You need to step back and take note of your strengths and weaknesses. What possible issues can arise? What can you do to either prevent these things from happening or deal with them immediately when they pop up?

Knowing how you will react ahead of time can make a big difference for you and your business.

6. What’s the Forecast?

It’s not an easy task, but an important inventory control method is to predict future demand. A few ideas:

• look at past trends
• check out market trends
• how has your business grown this year?
• any upcoming promotions?

Looking at these things will give you an idea of what to expect and then you can estimate how much inventory you will need.

7. Build Strong Relationships with Vendors

Having strong relationships with your vendors should be a non-negotiable within your business. You never know when you may need a favor like an overnight shipment.

Maybe you have product on your shelves that just isn’t moving and you want to see if you can return it to your vendor. If you have a great rapport with them, they are more likely to work with you.

Just like with any good relationship, communication is key.

8. ABC Analysis

By using an ABC Analysis plan, you will be able to properly prioritize your inventory management. You will need to look at all your inventory and put them into their proper category:

• A – high-value products
• B – moderate value products
• C – low-value products

When you categorize these products then you will know how much attention each product needs.

9. FIFO and LIFO

FIFO and LIFO are methods used to report profitability and value your stock. FIFO stands for “first in, first out” and LIFO stands for “last in, first out”. With FIFO, you get rid of your oldest inventory first. With the LIFO idea, you get rid of your newest inventory first.

Depending upon what your inventory is, you may not have a choice between the two methods. Obviously, if you sell perishable items, it’s a no-brainer to go with FIFO.

10. Just In Time Inventory Management

Just in time inventory management is the idea of making only what you need when you need it. This business idea was designed to cut down on waste and save money. When you use this technique, you are less likely to have wasted, unused inventory.

Start Improving Your Inventory Management Techniques Today

If you want your business to be profitable (and who doesn’t?), you have to have efficient inventory management techniques in place. Find what inventory management methods work best for your business and you can start improving your business today.

If you want more tips on effectively running your business, check out our business blog today!