As a business looking to maximize its profitability, improving your inventory management is an excellent place to start. Even if you think that you have already gotten your inventory management right, there’s always a few extra things that you can do to make it better. Here are insights into how to improve your inventory management.
Establish Minimum Stock Levels
One way for a business to lose its customers for good is to tell them that it’s out of stock for the goods they want and need. This would mean that the customer would have to find the products somewhere else, and they might never come back to purchase from you again. To avoid such situations, it’s best that you establish minimum stock levels. This would allow the business to consistently have on hand whatever its customers may need at any time.
Embrace the Use of Current Technology
For your minimum stock levels implementation to work, it would mean that you need to have someone who keeps tabs on all the stock you have. This can be pretty tedious for the employee, and they are bound to make some mistakes which can be rather costly. You can overcome this by using current technology to watch your inventory.
This can include having drones flying over your warehouse pallet racking to check how much inventory is left. Additionally, you can adopt inventory management software with artificial intelligence and machine learning built-in to alert you whenever your stocks run low as it will track sales. There is also artificial intelligence and machine learning software for flying drones in warehouses, so they won’t have to be manned.
By using these tools to keep track of your sales in a spreadsheet, you can easily determine what it is you need to order more of, and what you should avoid ordering in the future. Trust the data that your customers are giving you.
While embracing breakthrough technology, you should also ensure that the top-notch inventory management technology you have works seamlessly across the board. Having the latest technology that doesn’t work well with the rest of your inventory management software can be pretty disastrous. This is why you should install a full suite of pioneering inventory management technology even though it cost more, rather than installing a single piece of software after another.
Understand Your Supply Chain
Ordering additional stock as soon as your inventory starts running low is not enough to enable you to optimize your inventory management. You also need to understand your supply chain. How much lead time does each product in your warehouse need?
Lead time is the duration between when you place an order for new inventory and when the goods arrive at your warehouse. Different manufacturers have different lead times, which depends on various factors, including distance. Understanding the amount of time required for your supply chain to replenish your stock will allow you to avoid completely running out of stock before your new inventory arrives.
Prioritize the Products With A Quicker Turnaround
Every business has products that it moves quickly and those that take some time to sell. You should prioritize the products with a quicker turnaround, as they are likely to be the backbone of your enterprise’s success. The prioritization means that you should have more inventory of it and establish higher minimum stock levels. The general rule of thumb for most businesses is that 80% of the profits come from 20% of their inventory. It’s this 20% of the stock that should get the most attention.
Moreover, you should place the stock in an area of the warehouse where it can be quickly accessed. This would save your business the time it would otherwise have wasted trying to get to the quick turnaround products if you had them located at the back of the warehouse.
Hire An Inventory Consultant
An inventory consultant’s primary role is to smooth the edges of your inventory management and streamline the entire process. An excellent inventory consultant has experience working with an enterprise of your scale in your industry or other similar industries.
They will leverage their skills and expertise to develop unique ways for your business to have top-class inventory management. Additionally, they can be critical in solving supply chain problems you might encounter, thanks to their outstanding negotiation skills and knowledge of supply chain intricacies.
All these tips can be a lot for you to undertake at once, and it may take a little bit of time to improve your inventory management due to financial constraints or other factors. You can start by taking active control of your business’s inventory management rather than letting someone else do it for you. With time you will achieve positive results and use the additional profits to make other necessary changes to improve your business.