The primary goals of managing your inventories are minimizing cost, providing the right products to the right customer at the right time, and reducing wastage. A significant source of losses in business is poor inventory management.
As you know, inventory is part of your business capital. How you manage it determines whether you will earn profits or make losses. For this reason, you must ensure that inventory errors, overstocking, untimely ordering and inaccuracy handling are avoided or minimized in your business. As such, improving your inventory management should be a priority in your day to day business operations..
Here are the top four stock management tips that can enhance your enterprise results:
- a. Ensure you have a cycle counting in your business One mistake many entrepreneurs do is conducting annual stocktaking only instead of having regular cycle counting. Ignoring cycle counting is dangerous as it denies you an opportunity to audit your inventory regularly. Performing cycle counting on daily, weekly, and monthly basis enables you to avoid closing business for some days to do the stock taking.
Cycle counting helps you to have smooth business operations and is a perfect way of rectifying errors and assessing your products. With it, you can know which products are performing well and the one whose demand is declining. This helps you to invest your capital wisely.
- b. Limit access to your inventories If you want to achieve ultimate inventory management, you must limit the number of staff who accesses your inventories. Through this approach, you can effectively train the inventory managers on the best way to monitor your faculties. As a result, you will reduce errors and inaccuracies as only a few people will influence your inventories. You will as well enhance the efficiency in your business management.
- c. Set inventory thresholds. The principle of effective inventory management has the right stock quantity at the right time. One approach that businesses apply in managing their inventories is known as par level. This method involves setting threshold levels for each product you offer in your store.
In simple terms, it means setting the minimum stock level for each product that must be available in your business at any time. The determining factor for establishing par level value depends on the product sales and reordering period. Through this strategy, you can enhance decision making and obtain an efficient inventory management.
- d. Effect quality control. The quality of the products you offer in your business determines the number of sales you will be making and their frequency. If you are targeting quality conscious customers, you must ensure what you offer meets their specifications. In this regard, you need to implement quality check procedures that must be adhered to by suppliers willing to do business with you.
Also, you should develop quality check policies that your employees should follow in assessing the quality of products supplied. With this approach, you will have achieved effective inventory management as your staff will never accept any product that is below your business standards. As such, you will save the cost of stocking products that do not sell.
Moreover, you should ensure that your inventory storage does not have a negative impact on the products quality. Make sure you follow the condition spelled out on the product package on how to store each product. When experts advise you to "store this product in a cool and dry place,” you must strictly adhere to that condition.
- Final words All in all, for better results for your business, you need an efficient inventory management system. Effective inventory management involves ensuring regular counting cycles, limiting the number of staff who access your inventories and setting a stock threshold. Also, putting in place quality control procedures is essential in ensuring your customer satisfaction.
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