Every business owner would agree that keeping up with the inventory is not easy. Yet, it’s vital to do so since inventory directly impacts the bottom line. How do successful retailers in the world manage their inventory so well that they generate the maximum ROI? The trick lies in proper inventory tracking and management.
In this article, you’ll learn everything you need to know about tracking your inventory successfully.
What is Inventory Management?
In the simplest definition, inventory management is the process of keeping track of all the types of goods your business has in stock.
So what are the different types of goods? These can be any or all of the following:
- Finished goods or products
- Raw materials
- MRO or Maintenance, Repair, and Operating goods
- Work-in-progress or unfinished goods
- Safety stock (intended for shortages)
When you’re creating a roadmap for inventory management, you must consider the above types of goods.
The goal here is to track the goods from when they’re bought in as raw materials when delivered to the end customer or retailer.
The benefits of inventory management are aplenty. Almost all major and mid-sized manufacturers, retailers, and eCommerce websites have inventory management in place.
So how can you get started with inventory management for your business? While the answer will vary from company to company, there are some common steps everyone should follow. The same steps are mentioned below in greater detail.
Use a Centralized Inventory Management and Tracking Software
The first thing you must do is develop or arrange centralized inventory management software. What this system does is keeps track of every type of goods in the same place. So you have the data on raw material stock and the data on finished goods at the same place. This makes comparison and correlation easier.
The use of software is far greater than bookkeeping or manual record keeping. You record and keep the entries digitally, which is more accurate. You can later access and edit these entries if required. But with manual record-keeping, there are chances of human errors that can seep into the records.
Advanced inventory tracking software can link with other software like marketing, logistics, and sales. So your entire business unit will benefit from such software.
Therefore, if you haven’t already, you should invest in inventory tracking software, preferably a cloud-based one.
Create a Real-time Tracking Strategy
In this fast-paced world, keeping records in digital format is no longer helpful. What matters more is real-time data on what is happening with your inventory. Instead of getting information on how many packets of goods were sold at the end of the day, you instantly get the information when the transaction takes place.
The main benefit of this type of tracking is that it optimizes the supply chain and product movement at a granular level. You’ll unearth bottlenecks and spot inefficiencies within the supply chain that might be hurting your bottom line.
For real-time tracking of goods, you have to utilize certain technologies like RF Identification tags, QR codes, and barcode scanners.
As per a study, barcodes at a medical facility reduced administration errors by almost 41%. So they’re worth the cost.
Engage with Suppliers
A business relies on multiple suppliers or vendors to manufacture and deliver its products. If you’re a brick manufacturer, you will partner with a supplier who will provide silica, lime, magnesia, among other materials.
For an efficient supply chain and inventory management practice, you must engage your suppliers in the process. If they have similar inventory tracking in place, you can request the data and integrate it into your system. This way, you can eliminate the need for manual bookkeeping and reduce erroneous data.
Most inventory management systems of today are capable of integrating with third-party applications. So this will automate the process end-to-end.
Develop a Direct to Customer Model
For the most efficient inventory tracking, you must sell directly to your customers. The fewer middlemen you’ll have in your delivery process, the less efficient the process will be.
By selling directly, you gain more control over the process. You’ll be able to handle the delivery and returns in a better way. The Direct to Customer or DTC model is driven by the internet and eCommerce age. With a website, you can sell directly to your customers instead of selling through a retailer.
If implemented correctly, your inventory management and tracking will become more accurate. As the competition grows, inventory management will get more complicated. Therefore, you must invest in trustworthy real-time inventory tracking software for the best results.
Interesting related article: “What is Logistics?“