Inventory management is a balancing game. It’s easy to see the potential problems that can arise when you don’t keep enough inventory; customers who can’t find what they’re looking for will simply head to your competition, and it’s anybody’s guess as to whether they’ll ever return.
At the same time, however, having too much inventory can also be damaging, tying up cash flow and racking up costs in terms of tracking and storage.
Getting it right can make a big difference to your profitability. Here are some tips for small businesses that are looking to improve their inventory management.
1. Keep track of everything.
When it comes to tracking product information, more is always better. In addition to the barcode data, SKUs, origin and lot information, and suppliers, it can also be helpful to track the cost of your items over time to gain a sharper awareness of any factors that influence the cost, such as seasonality and scarcity.
2. Use prioritization.
Small businesses often find it beneficial to place their inventory in priority groups. Many use groups labeled A, B and C, with A being the big-ticket items that the company doesn’t need to keep a lot of on hand. The C group, meanwhile, encompasses items with a lower cost that tend to turn over quickly, while everything else falls under B, moderately priced items that don’t move as slowly as A or as quickly as C.
3. Take a closer look at supplier performance.
Problematic suppliers can wreak havoc on your inventory and your business as a whole. Watch out for suppliers who are regularly late or who often short orders, and be proactive when it comes to talking to them about these problems. It may be necessary to switch partners, so don’t be afraid to walk away and find someone more reliable. Your business depends on it!
Inventory management may sound tricky on the surface, but these practices can help you conquer this vital business skill.
This blog post was based off of an article from Business News Daily. Read the full article here.