When stock-keeping was less complex, it could be done by hand on a spreadsheet or a notebook. Now, retailers have multiple suppliers and distribution channels to keep track of. Their old systems no longer cut it to ensure their shops are stocked fully. Keeping accurate stock record are also essential if you ever need to make an insurance claim. Make sure you aren’t paying too much for insurance for shops by comparing online on a regular basis.
There is no one-size-fits-all method of inventory management. But there are certain approaches that have evolved to be worth considering. We’re going to talk about some ways to manage your inventory and ensure you keep your shop stocked properly at all times.
Establish minimum requirements
The first thing you need to do is establish what your minimum levels are for each product you procure. Once you establish those minimum requirements, you know that the minute you dip below those levels is the time you need to place an order to replenish your stock. These minimums will vary depending on the product, how quickly it sells, and how long it takes to receive new stock. Establishing minimums for the stock can take some time and effort but, once in place, it will help you make quicker decisions and minimize confusion.
The inventory reorder point is the point at which you are told that a new order must be made. The inventory reorder point is a function of many factors but mainly your demand forecasts and lead forecasts.
In the beginning, you may have to conduct regular reviews, either continuous or periodic, to ascertain when to make a new order for stock. Continuous review is a practice where stock is continuously monitored so that it can be detected immediately when it reaches the reorder point. It is usually done by larger companies with a faster sales cycle. Periodic review is done by weekly, monthly, or another regular review. Both reviews are done to determine the most appropriate reorder point.
Answering the question of how much to reorder can be pretty much done in two ways. The first is a fixed order quantity, wherein you order the same quantity every time the stock reaches the reorder level. The second is an order up-to level. The brand usually has a certain quantity of stock at the beginning of each period. The brand will then order as much as it takes to return to its desired level.
Use point-of-sale data to track inventory
POS inventory software can be configured to feed data to inventory records. The data will help you attain greater insights into your inventory movement. If you analyze the data for insights, you’ll be able to garner information about which items move quickest and what you can do to prevent out-of-stock situations.
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You can also use point-of-sale data to obtain better forecasting of lead times i.e. how long it takes for a new order of your product to hit the shelves.
Maintain supplier relationships
There’s more to supplier relationships than just friendly conversation. Being adaptable is critical in successful inventory methods. If your supplier is willing to work with you to solve problems, then you will have the ability to quickly troubleshoot issues as they arise. If the lines of communication are kept open, a supplier will inform you early if a product is late or anticipated to rise in price.
Monitor and tweak your system
If you’re just starting to put in your inventory management system, don’t think it’s a one-time thing. The first time you put in a system, you will realize over time that a lot of your assumptions were wrong. Confronting those will make your system better over time. It’s not enough to merely collect and log data at the beginning. You must also constantly be iterating and updating your process. Continue to use trial and error to learn. Not every shop will use the same restocking procedures so you will have to figure out something that works best for you.
Streamline the system
If you have a distributor, it’s time to inform them of your forecasts of demand and lead time. It might help drive home the point better if you show the distributor the data behind your calculations. If you place orders yourself, then you will need to do so as soon as your shop requires fresh stock. Any delays in receiving fresh stock can throw off the delicate balance of your shop and lead to losses.
Consumers nowadays demand more and better service from businesses. Businesses must have their processes and systems running smoothly to serve the modern customer. The challenge for businesses is to meet the demands of customers while also keeping inventory up to date. All the while businesses will be trying not to have any inventory that is stuck in the cycle having seen it’s last stylish or trendy day. Also read: Is Kissanime Illegal?