Maintaining an efficient inventory is a good way to remain competitive in the market. An efficient inventory is much cheaper to maintain, which means the business can lower its overhead and utilize a more competitive pricing strategy. At the same time, an efficient inventory limits business risks at an optimum level.
There are many ways to improve your inventory of goods when you are running a retail business. In this article, we are going to review some of the steps you can take to improve the efficiency of your inventory and the benefits those steps bring to your business. Let’s get started!
Refine Your Strategy
Inventory management is as much about meeting demands as it is about your own business strategy. It is easy to fall into the trap of trying to offer everything to as many customers as possible, but that is not always the right approach to take.
When you add more items to your catalog, you risk increasing the size of your inventory. This will result in higher inventory-related overhead costs and difficulty in managing the merchandise you sell to customers.
To avoid falling into the same trap, it is time to take another look at your approach. Review the merchandises you offer – or will be offering – customers and start cutting down the number of goods you carry. Stick to items that suit your target market perfectly.
Know the Market
Another great strategy to incorporate when you are trying to optimize your inventory is demand forecasting. The more you understand your customers and the market as a whole, the more you can determine the right level of inventory to maintain.
You can learn about the market from the existing data you already have: your sales. Processing relevant data will result in a clear insight on goods that sell well on the market, along with details about sales volume and market demand.
Some solutions like the integrated retail solution from Logic does this automatically. They take your sales and other information and then perform retail demand forecasting automatically. The forecast will help you maintain the right level of inventory at any time.
Work with Suppliers
As mentioned before, maintaining a large inventory carries risks that need to be mitigated. Even when the goods aren’t fast-moving and don’t have expiry dates, you still risk not selling the merchandise and having to liquidate the inventory at a loss.
A great way to work around this risk is by working with your suppliers. Some suppliers have a reliable network of distribution, making a just-in-time inventory and on-demand delivery options that you can consider. Others will work with you and take back the goods that don’t sell in exchange for credits.
Both of these approaches let you be more fluid with your inventory. It is much easier to keep your inventory level at its best when you work with suppliers that offer these options. The cost-savings alone help you be more flexible on the market.
At the end of the day, that’s the most important goal: being flexible. With the market becoming more and more competitive, maintaining flexibility as a business is the key to separating yourself from competitors.