The best thing you can do to the stock at your business premise is to control your inventory. Controlling your inventory helps you reduce risk of losing your stock, tell fluctuations in demand of your products and make you offer the best services to your esteem customers. Wrong inventory will mess up everything in your premise, you may end up shipping products that don’t sell or your money will be held up by products that no longer meet your customer needs.
For a new or a growing business, inventory control is a very important aspect that you should consider for a sustainable growth of your business. The more accurate your inventory management system is, the more promising your business is. It predicts the rate of growth your business is anticipating. Below are some of the best techniques of inventory control that will help you maximize profit and efficiency of slightly perishable products/goods;
1.Preparation Of Inventory Budgets
Most distributors have an annual inventory budgets for every financial year which are always prepared early before procurement orders are placed. Budgets should capture materials cost, logistics cost, operational cost, distribution cost and other miscellaneous cost.
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2. Mantainance Of An Automatic Inventory System
This system keeps track of the quality and quantity of all the items in the shelves. This system is also known as a “a perpetual inventory system”. It helps a whole seller automatically tell the number of items that have exited the shop, those are already bought and the deficit needed.
3. Inventory Turn Over Ratio
Inventory turnover ratio or items used up ratio is the calculation that is used to determine the rate at which goods are exiting the shelfs for a specific period of time. When the ratio is higher, it means huge stock is exiting the shelfs hence there are large sale volumes which leads to optimum profit. Inventory turnover should be accurately watched to know every product cycle especially for goods that are highly perishable. This will help you determine items whose quantity needs to be increased and those that are not doing so well to be reduced.
4.Developing Stocking Policies
The business owner should decide the minimum and maximum quantity of stock that his/her warehouse or pool of warehouses can accommodate. The management must also decide on the average stock that the suppliers ought to deliver within a financial year. This will help optimize re-order levels, safety of stock levels and an average inventory required to ensure the costs are contained.
5. ABC Classification and Analysis
Literally the fastest moving goods should always be placed close to the receiving and shipping areas for easy identification. When a product demands rises, the product should be migrated forward and those that demand has decreased should be migrated backwards to create space for those items with high turnover ratio.
Also new products in the market should be created space for easy identification. The premise layout should be well organized according to demand to reduce time spent looking for specific items.
6. Introduction Of Purchasing Procedures
The warehouse management must make sure that purchasing procedures matches the sales patterns and customer demand to ensure adequate inventory control. Those products that have become obsolete should be liquidated to avoid unnecessary transport cost. Any item whose demand is decreasing, it’s quantity should drastically reduce to avoid more products becoming obsolete hence bringing loss.
After you have taken consideration at the techniques of controlling your inventory, it’s very important to also read through some of the tips of taking control of your inventory and stock management.
Reducing Receiving Errors Through Bar Coding
To reduce inventory errors mostly when your sales volume is high or when most of your items resemble each other, bar coding is always the best solution. However, this coding should be digitalized, should be use of inventory control software and an USB scanner which is always affordable. After receiving any stock from the suppliers, you should print bar codes for every item for easy identification.
Immediate Recording Received Orders
New deliveries should be recorded to the system right away. You should suspend any other activity be it placing new orders or supervising employees in order to record new deliveries. When products that aren’t recorded are sold, it will mess up all your inventory management system completely and rectifying the mess will cost you a lot of energy and time.
Keeping Track of write-offs, Donations And Gifts
Your business will periodically sponsor some activities, charities and events as a way of giving back to the community. You should be careful on this write-offs, you need to develop a new system specifically for them that will enable you to calculate the total cost of your donations. You will also need to reduce your stock by the total cost of your donation to avoid confusion.
Account For All The Consignments
Managing stocks which you will pay for them after selling them is always very tricky. You don’t have to record these items on your inventory value list because you don’t own them, the best way to handle consignments is to separate them from other stock or have them in their own warehouse.
Earmark Stock Using Allocations
Before updating the quantity of your inventory, it is important to allocate items to sale orders to avoid reselling them. Just allocate stock to the sales as they arrive to avoid late rush to get everything ready. This mostly helps online shops to reserve those already sold and paid for stock.
Whether you are using a more integrated system like Bright pearl or less integrated systems, the techniques for controlling your inventory and tips for inventory and stock management system we have given out above will help you optimize your stock control. Stock control is a very important aspect for a new, growing or developed business, it predicts the rate of growth your business is anticipating. Sustainable stock control techniques will reduce loss, optimize profit and business growth. In fact, it means the difference between failure and success of a business.