Having inventory on hand is essential for any business, whether it be in the form of raw supplies and materials, finished goods, or anything in between, commonly known as WIP (work in progress) inventory.
On top of managing customer relations, marketing strategies, employee productivity, and other internal factors, managing your inventory can seem like a tedious and difficult aspect of your business.
Different types of reliable inventory management software, like the inventory management software for Salesforce, allow companies to purchase orders, complete invoices and generate barcode labels all in one place.
Even if you have the ideal software, human error can still occur. Minimize inaccuracies and make the process of managing your business’s inventory simple with these 4 tips.
1. Establish Par Levels
A par level is the minimum amount of product that your business must have available at any given time. Par levels can vary depending on the specific product in question. Determine your par levels based on your products’ demand and how quickly you are able to get them back in stock.
The operations of a business can change at any point, so don’t become set in your ways. Continuously research the most optimal par levels and don’t be afraid to make adjustments if it is deemed fit to do so.
2. Maintain Solid Relationships with Suppliers
Be personable, friendly, and honest with your suppliers. Having a stable relationship with your suppliers will grant your business the flexibility it needs in busy times. Suppliers can let your business:
- Expand its storage space in times of need
- Remedy manufacturing problems
- Replace outdated products
- Replenish popular items in a timely manner
Also, be sure to keep lines of communication readily open with your suppliers. Give them plenty of notice if you are expecting an increase in sales. Have them inform you if they are running low on a product, so you can take the proper steps to find other products to use temporarily or end promotions your business is holding.
3. Utilize FIFO
FIFO, or First-In-First-Out, is a popular practice in the field of inventory management. With FIFO implemented, businesses always use or sell their oldest products. While it is customary to use FIFO in industries that deal with food or other perishable items, FIFO should be employed across all businesses.
FIFO prevents older items packaged in boxes from getting damaged or worn. Also, products can undergo packaging changes or obtain feature upgrades. If businesses don’t mindfully use and sell their oldest inventory first, they may end up with outdated or obsolete products, which can lead to a loss of profit.
4. Conduct Regular Audits
Many businesses conduct annual audits in which they complete a comprehensive count of inventory to see if it aligns with records on hand.
Businesses often have a lot of expensive inventory that makes counting it once a year inaccurate and ineffective. Consider establishing monthly, weekly, or even daily audits of your business’s inventory. Evaluate the nature of your business to determine an auditing schedule that makes sense. Maybe checking the inventory of one product per day will work well for your business, while a competitor may benefit from spot-checking, which is the randomized counting of fast-selling products.
Consider the value of the products you have on hand to determine an auditing routine. High-value products are responsible for a large portion of your business’s revenue, so it is important to keep an eye on them. Low-value products are responsible for a high percentage of your sales, so you may want to audit for them during busy shopping times.
Never allow your business to fall behind on what it needs to succeed with these 4 tips!