One of those unpleasant, but very necessary, tasks that all businesses must deal with is inventory management. Any small business that has lost a customer because items were out of stock, or lost money because of excess stock, understands just how essential sound inventory management is.
When inventory management is done correctly, a business will always have the right products for sale, in the right quantities, at the right times. It’s far from a perfect science, but there are some ways to make the job a lot easier without sacrificing accuracy.
For example, small businesses can use the first-in, first-out approach, commonly abbreviated as FIFO. This dictates that goods must be sold in the same order that they were created or purchased, and it’s particularly important for perishables like flowers, food and cosmetics. It’s easy to incorporate this approach; simply add new items to the back so older products remain in the front.
Software Can Make All the Difference
Cloud-based inventory management software equipped with real-time sales analytics is another great way to handle this job. Most options will automatically adjust the stock levels as sales are made, and they can also typically be set up to send alerts regularly, so you’ll be able to order items that are about go out of stock in a timely manner.
You also need to make a point of identifying low-turn stock. For example, if you have any items that haven’t sold during the last six months to a year, you should seriously consider stopping stocking the goods in question. Turn to strategies like promotions or discounts to get rid of what you have and avoid wasting space and capital with excess stock.
Finally, you should fine-tune your forecasting. When calculating projected sales, don’t forget to include factors like market trends, promotions, predicted growth, marketing efforts, and the economy in addition to your historic sales figures.
This blog post was based off of an article from The Balance. View the original here.