Each year, retail-based businesses lose around $46 billion due to inventory shrink. In short, inventory shrink is caused by things like shoplifting, ordering errors or less than stellar inventory auditing procedures. If your business provides goods to the general public, staying ahead of inventory issues should be one of your top priorities.
Over the past decade, online businesses have grown in popularity. With an online business, the only overhead cost you will have is related to operating a warehouse. The only way to keep your online business profitable is by keeping a close eye on stock management issues.
The worst mistake most business owners make in relation to stock control is ignoring problems until they cause major problems. The last thing you want is for a customer to order a product you don’t have in stock. Not only will this make the customer mad, but it could also tarnish your image.
The following are stock management 101 things you need to consider when trying to keep your inventory under control.
When paired with reorder point formula, prioritizing inventory can be effective. The best way to get the information you need about the products your warehouse is by looking at a sales history report.
These reports will provide you with a breakdown of how often a product is ordered and whether or not customers have been unable to order due to low or no inventory. The time and effort you put into prioritizing your inventory will pay off in the long run.
In some cases, the location of the product manufacturer will make the item scarce during certain times of the year. For instance, if a product manufacturer is located in New England, you may experience shipping delays during the winter months.
Adequately preparing for product scarcity is much easier when arming yourself with the right information. Failing to see production information from all angles will make it difficult to avoid inventory-related issues in the future.
While a yearly inventory audit is the standard, you can perform this procedure any time you want. It may be a good idea to perform inventory audits on a bi-monthly basis for a while. Doing this will give you information on what parts of your inventory management policy needs to be refined.
Once you have ironed out the inventory problems being experienced, you can go to a once a year audit. Making sure your whole team is on board with the inventory management process can make it easier to implement.
When a supplier is habitually late with shipments or delivers damaged packages consistently, you need to replace them. The longer you wait to fix this problem, the harder you will find it to provide your customers with the quality items they deserve. It can be challenging to keep track of your supplier's performance and contract compliance on your own. If you are looking for data-driven results, a supplier management software is a must. They can help you stay on top of KPIs and ROIs without redirecting your resources. With their help, you can better decide whether you want to renew your contract or look for someone new.
Before choosing a new supplier, you will need to do your homework. Finding out how long a supplier has been in business and what type of track record they have is essential. Once you have this information, narrowing down the list of available suppliers will be a breeze.
Most business owners abide by the 80/20 rule. This rule states that for every 80 percent of the profits your business generates, 20 percent of it should be spent on new inventory.
The items you purchase should be the products that sell the fastest. This will help to ensure you don’t run out of these items.
These programs are designed to help with every aspect of your business. The right program allows you to scan in new inventory and keep track of the existing products you have on the shelf.
Looking for more advice on running an online business? If so, check out our article on the best plugins for your WordPress e-commerce website.
The worst mistake most business owners make in relation to stock control is ignoring problems until they cause major problems. The last thing you want is for a customer to order a product you don’t have in stock. Not only will this make the customer mad, but it could also tarnish your image.
The following are stock management 101 things you need to consider when trying to keep your inventory under control.
#1 Stock Management 101- Prioritizing Inventory is an Essential Part of Stock Management
Getting to know your inventory and how it sells can be very helpful when trying to devise a stock management strategy. Failing to get information on how frequently a product is ordered will make it impossible to avoid inventory-related mistakes. With this information, you can create a list of which products should be reordered on a regular basis.When paired with reorder point formula, prioritizing inventory can be effective. The best way to get the information you need about the products your warehouse is by looking at a sales history report.
These reports will provide you with a breakdown of how often a product is ordered and whether or not customers have been unable to order due to low or no inventory. The time and effort you put into prioritizing your inventory will pay off in the long run.
#2 Stock Management 101- Accurate Product Information is a Must
As you begin to develop a system to organize your inventory, you need to make sure you have access to all of the product information. This information should include things like barcodes, where the supplier of the product is located and how scarce it is.In some cases, the location of the product manufacturer will make the item scarce during certain times of the year. For instance, if a product manufacturer is located in New England, you may experience shipping delays during the winter months.
Adequately preparing for product scarcity is much easier when arming yourself with the right information. Failing to see production information from all angles will make it difficult to avoid inventory-related issues in the future.
#3 Stock Management 101- Routine Inventory Audits Should Be a Priority
Some business owners think that once they have an inventory management policy in place, they can switch to autopilot. In reality, you will have to audit your inventory and test your management policies on a regular basis. Simply setting and forgetting inventory management is a recipe for disaster.Once you have ironed out the inventory problems being experienced, you can go to a once a year audit. Making sure your whole team is on board with the inventory management process can make it easier to implement.
#4 Stock Management 101- Take a Look at Supplier Performance
All of the inventory management optimizations in the world won’t fix supplier-related issues. Keeping a close eye on supplier-related delays and problems can help you address before major disasters occur.
Before choosing a new supplier, you will need to do your homework. Finding out how long a supplier has been in business and what type of track record they have is essential. Once you have this information, narrowing down the list of available suppliers will be a breeze.
#5 Stock Management 101- Abide By the 80/20 Rule
New business owners tend to have a problem with estimating how much money should be spent on inventory. When first starting out, you need to make sure your inventory is fully stocked. Neglecting to do this may cause issues with customer satisfaction.Most business owners abide by the 80/20 rule. This rule states that for every 80 percent of the profits your business generates, 20 percent of it should be spent on new inventory.
#6 Stock Management 101- Embracing the Power of Inventory Management Technology
Trying to manage your inventory manually can lead to lots of errors being made. The best way to avoid these problems is by using inventory management technology. Luckily, there are a number of inventory management software programs on the market.These programs are designed to help with every aspect of your business. The right program allows you to scan in new inventory and keep track of the existing products you have on the shelf.
#7 Stock Management 101- Inventory Optimization is an Ongoing Process
When it comes to successful stock management, there is no magic wand to wave over the problems you have. Continually testing and optimizing your stock management strategy is the only way to keep it effective.Looking for more advice on running an online business? If so, check out our article on the best plugins for your WordPress e-commerce website.
Ashutosh Jha
Ashutosh Jha is a professional blogger, Blog and IT Consultant. He writes about Blogging, SEO, Making Money, Internet Marketing and Web Design.
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