When it comes to managing inventory, there are five principles you need to keep in mind. By focusing on the fundamentals of inventory management, you can control investments and maximize the savings you see on your bottom line.
If you are interested in understanding trends in your inventory, create demand forecasts, monitor warehouse flow, track stock rotation, keep an eye on cycle counting, and process auditing, investing in an inventory management software.
Every industry has their own specifics, but each industry has five primary focuses when it comes to cost. One of the best ways to save money in an industry that involves overhead costs is to balance supply and demand. One of the costliest mistakes you can have is oversupply or under-supply. By accurately forecasting what your demand will be on individual products.
The best approach is to establish an acceptable minimum/maximum protocol based on unique inventory needs to ensure that your stock is adequate to supply your customers but does not leave you with costly overstock.
When most people think of warehouses, they think of dirty, unorganized buildings with metal shelves. Warehouses have developed into more attractive, better organized facilities that are easy to run, and sustain discipline. Just like any other business, being disorganized in a warehouse wastes a lot of money. By standardizing and streamlining everyday processes, like cleaning and inventory, you can ensure that business runs smoothly and there is minimal waste.
The key is ensuring that all items are properly organized, and the inventory flow runs smoothly.
When selling items is time sensitive because it is perishable, pharmaceutical, or chemical in nature, rotating stock is essential to the health of your customers, and your bottom dollar. You should effectively manage your inventory and keep track of lot numbers for several reasons, including:
- Business costs
- Health and safety
- Potential recalls
You should always have a clearly outlined protocol for handling inventory rotation and what steps should be followed if a problem should arise.
Cycle counting is an extremely effective way to maintain an accurate understanding of your inventory. Not only can it help you understand how successful your current stock is, it also helps you maintain accountability and locate potential errors. While cycle counting can be costly, some industries require it for financial success.
The most effective way to identify error sources is through process auditing. Successful inventory management requires you to audit early and audit often. A process audit should occur at each transition your inventory makes. It should be completed at each inventory transaction through the company and should be monitored carefully.
By following simple steps on a regular basis, you can not only control your inventory, you can make predictions on inventory needs in the future. Since overhead inventory costs can cause financial issues with a company, it should be your primary focus. By learning how to follow these protocols, you can better manage your inventory, and your company’s finances.