What’s the inventory management?
Inventory management is the method of monitoring and tracking the weight, measurements, number and location of a company’s inventory items. The aim of inventory management is to reduce inventory keeping costs by helping business owners realize when it’s time to replenish goods or purchase more supplies to produce them.
An inventory control system can also help avoid a variety of other errors:
When you’re selling a product that has an expiry date, like food or cosmetics, there’s a very real risk that it’s going to be bad if you don’t deliver it in time. Your oldest stock is first sold, not the latest stock first.
Evitate dead stock
Dead stock is a stock that can no longer be sold, but not necessarily because it has expired it may have gone out of season, out of style, or otherwise become obsolete.
Save the costs of storage
Warehousing is also a variable cost, which means that the commodity you store varies depending on the quantity. You will raise your storage costs if you store too much inventory at once, or end up with a hard-to-sell product.
For excellent inventory management we will outline five important tips so you know exactly how much inventory to stock.
1. The Demand Strategy
Study past year’s data to assess the amount of “base demand” for each year. Using this knowledge to estimate the future demand. You may also estimate your marketing activities and average conversion rates based on your results. This will allow you to figure out how much stock you will have for a certain date.
2. Set minimum amounts of stock
You must always have the minimum quantity of goods on hand. This amount can vary depending on the anticipated demand and the speed at which a specific product sells. Your product orders will allow you to systematize. Make sure you regularly re-evaluate your MSLs as market conditions can change over time.
3. Prepare for contingencies
Unprepared companies may be hampered by this type of problem. Examples include:
– You suddenly raise your turnover and over-sell your stock
– You are running into a cash flow deficit and cannot afford the urgently needed commodity.
– You don’t have ample space for your seasonal peak in sales to accommodate.
– An inventory miscalculation means you have less than you imagined.
– Your producer is exhausted and you have orders to fill your product.
It is not a question of whether there are any issues, but when. Identify the location of your concern and prepare an emergency plan.
4. Timetable auditing inventory.
Although the manual monitoring of your inventory is still a required practice, even with large systematic inventories that minimize human error. It is excellent to rely on reports and software to track your stock every day, but you may want to check your stock manually to make sure that your inventory suits your current data.
5. Take dropshipping into consideration.
If your inventory is too expensive to handle and store for your current requirements, dropshipping could be an ideal option for inventory management. Installed in the hands of the provider are dropshipping, rather than carrying and delivering goods yourself. Dropshipping got all the key things which will help save you money by eliminating storage and delivery costs.