When you’re running a business, gauging supply and demand can be difficult. While you may have some blanket ideas about seasonal shopping when you may be busier than usual, there’s also no telling when things may go quiet, either. Without the foresight of proper stock management, you might end up with too much inventory or lack the necessary amount to combat losing customers and a diminished revenue.
While marketing and social media are important parts of the business, stock management is somewhat unsung when it comes to business improvement. If you’re struggling, it might not be an area you’ve considered, but it could well be the solution. You may still be used to outdated methods that are slow, prone to human error and lack the precision you need to make the right business decisions going forward.
To get a handle on stock management issues within your business, read our step-by-step guide to improving the processes and management of your business’ inventory. From doing the appropriate research to assessing stock levels, we hope this actionable plan is a useful resource for dealing with your stock issues.
Things like bar-code scanners and stock management software can take care of time-consuming, repetitive tasks. This allows for greater efficiency and productivity, since it allows your employees to focus their energy on other, more important areas of the business.
If wherever you keep your stock is a bit of a mess, then it’s likely to create problems managing the contents. Optimise the space by grouping your best-selling products together in accessible places; this will speed up the order fulfilment process and keep your customers happy.
By keeping track of the products that are in stock and have been ordered, you stand to save yourself a lot of time and effort having to do an additional stock take to maintain accurate records. The stock management strategy you’ll set up can also help to save money that might otherwise be wasted on slow-moving products.
By changing your stock management for the better, it will be easier to calculate how much inventory you need at any given time. This means you can avoid dreaded product shortages, and it gives you enough inventory without having too much stock in your business’ warehouse.
Sound stock management processes tend to lead to returning customers. If you want people to keep buying your products and services, you have to be in a position to meet customer demand directly and efficiently. Improving your stock management allows you to meet demand by having the products you need as soon as customers require them.
Below, we list 10 practical ways to bolster how your business manages and organises its stock levels and inventory.
What were the periods when your inventory, either an excess or a shortage, didn’t meet up with the demand? These moments when there was an element of discord between the two can help you figure out the missteps with your stock. Through identifying these errors, you’re in a better place to prepare for improving the business’ stock management.
Take a look at the last few years of your previous retail statistics to track the various periods where demand peaked or there was a significant drop. This way, you can forecast for upcoming seasons. Be sure to track current trends among consumers too, including their buying behaviours as well as any needs and wants they may have. The two combined help to show how you need to proceed.
Take into account the numerous expenses involved in the supply chain, such as freight, volume, discounts and warehousing. How have these been impacted by your current inventory system? And, how can some judicious waste removal help to lower these costs? Talk to the partners in your supply chain to see if you can renegotiate any of these costs with new supplier and logistics agreements.
If you have any manual processes left in your stock management system, then it’s well worth looking into automating them. Even if you’re a small business, there are plenty of online tools that you can use to smooth out your processes as much as possible. Automating things that your employees previously took care of helps to reduce human error that can seriously hurt your performance in the long run.
Maintaining a strong working relationship with your supplier is imperative. If you’ve improved everything on your side only to be let down by suppliers who don’t meet your standards, then it’s sure to hurt the supply chain. Be sure to provide them with feedback if you feel like they could improve in certain areas. If they aren’t willing to change then consider working with new suppliers who are more in line with your own best practices.
Using inventory management software, it’s possible to create different layers among your products that address different periods of demand for specific types of merchandise. This also allows you to categorise your inventory by customer type, the profit margin it delivers, and the overall cost of the stock. Setting up a system in this way creates the means to deliver on various types of demand while minimising the cost.
To go along with the step above, creating goals for each category that you can then track and measure is always a good idea. It also helps identify further issues that weren’t identified at earlier steps.
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While it’s important to improve certain areas, you still need to meet your current demand too. At this point, you’ll need to make an executive decision: which things need to be immediately fixed, what will need more long-term attention, and what can be handled down the line when things are quieter?
Sometimes, asking for a second opinion from someone outside of the business can help clarify the issues with your stock management. Consider bringing in a consultant who can specialise in evaluating these types of systems and provide you with some suggestions. They’re also adept at providing information on the latest technology, which can be tailored to specific needs, address visible issues, align with your growth strategy and work with your budget.
The changes you’ve now made should form the foundation for a formal inventory management policy with which to define responsibility, demonstrate your cost-balancing measures, and show the customer processes you’ll use to meet fluctuating demand. Covering each aspect of your inventory management in this policy illustrates the best practices you can take, reflecting a new culture that’s focused on continuous improvement of the business.
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