Running a store is a thrill in itself – running errands to find the best wholesale products, trying your best to retain customers, keeping up with the latest trends and whatnot. The art of retailing can’t be mastered by anyone, especially not without knowing inventory management.
In a perfectly-seeming scenario, your store would be at auto-pilot mode where the products would disperse themselves and you will have no losses. But this is reality. You have to coordinate with your inventory’s movement on a routine basis so that new and better products can be stocked on the shelves.
The concept of Inventory management was developed to minimize the cost of holding inventory while keeping stock levels consistent and getting products into customers’ hands faster. Inventory management is the heart of a successful retail business.
Not sure where to get started with inventory management? This guide will walk you through its definition, challenges, and tips for managing stock while running your business like smooth sailing.
So, What Is Inventory Management Precisely?
The term “inventory management” refers to the process through which a company handles the acquisition, storage, and distribution of goods. It guarantees that stores never run out of stock and always keep a sufficient supply on hand.
It also keeps tabs on the quantity, size, and placement of your company’s stockpile of items like bulk confectionery, wholesale beauty products or others.
Costs associated with stocking items or raw materials can be reduced with the use of inventory management. Having this information allows you to keep your inventory at the right level while keeping your costs down.
How Is Inventory Management Different From Inventory control
Controlling stock levels is a part of inventory management but serves a somewhat different purpose.
In contrast to inventory management, which takes into consideration demand forecasting, ordering, and receiving goods, inventory control refers to the act of controlling, monitoring, and handling the inventory you currently have at the outlet.
Inventories VS Stocks
Inventories are most often mistaken with stock but they are fairly different. Stock can be termed as the products ready to be sold to clients, whereas inventory includes both raw materials or even more finished products. As far as retailing for finished goods goes, it can be said that every inventory includes stock, but not all stock is called inventory.
Challenges Encountered While Managing Inventory
1. Phantom inventory –
One of the key difficulties of inventory administration is handling phantom inventory. Phantom inventory refers to a circumstance where your point of sale system is reporting available stock that doesn’t in fact exist in your store. This scenario can be pricey, as it will certainly lead to inaccurate stock degrees that can affect your choices concerning your product offering and reordering.
2. Ever-evolving demand –
Continuous shifts in demand can also cause challenges with inventory management. For instance, the pandemic led to transformations in demand virtually overnight, causing many stores to run out of stock of numerous products very swiftly.
3. Supply chain woes –
Another external factor that can greatly impact your supply monitoring is the international supply chain. Supply chain restrictions will create supply outs at your store if you do not have enough safety and security stock handy.
4. Difficult checking procedures –
Counting stock is a challenging and also lengthy procedure. Given that counting supply takes so long, you’ll likely require to either shut down your store for a day or ask staff to come in beyond the working ours (which costs you overtime). On top of this, hands-on inventory matters are prone to mistakes which can cause further concerns.
5. Mismanaged storerooms –
Maintaining an arranged stockroom is one more difficulty of stock monitoring. An untidy stockroom will certainly make it tough for associates to locate stock for clients when they require it- which injures consumer experience- as well as can also bring about shrinkage in inventory.
Tips To Ease Inventory Management
1. Categorize your inventory
Prioritizing your items right into groups helps you understand which require to be gotten often as well as how sluggish they vacate your stock. This enables you to invest even more time and resources on rewarding items.
To maximize your supply dollars as well as enhance efficiency, split your supply into a number of teams based on turnover and also earnings. Beginning with three:
Group A: Discounted items that market fast
Group B: Mid-priced items that move slower
Group C: Expensive things that sell the slowest
It’s obvious that not all items have the same value. If you invest equivalent inventory time on all items, you’ll likely bamboozle the ones that deserve your attention. By categorizing products in priority groups, you’ll get more effective inventory counts as well as assure that degrees of your greatest value items are preserved.
2. Update inventory records in real-time
Maintain documents of product info for all items in your stock. Accessibility to fresh, appropriate supply information is crucial to move items swiftly as well as efficiently. You’ll want to keep information such as SKUs, barcodes, providers, and great deal numbers. And also, recognize when the last purchases occurred.
Holding dead supply can cost you in warehousing fees. Elements like seasonality or patterns can impact how quick items relocate. If it’s been months given that a product offered, or if turnover has actually decreased, you might want to offer the item muddle-headed and also use the income to purchase a much more successful item.
3. Audit stock frequently
Real-time tracking likewise makes it simpler to audit your stock consistently. Some stores audit stock once each year, while others can do monthly or regular check on their products. No matter, run audits to ensure accuracy between your stock quantity and also financial records. This will certainly help you recognize your stock circulation as well as profits as well as losses, and maintain stock flowing smoothly.
4. Evaluate Supplier performance
A bad vendor can trigger chaos for your business. If they are continuously late with distributions or send the wrong quantity of things, it can throw off your procedure. A distributor audit is a chance to identify where vendors can improve or when to reduce them off.
Go over any type of concerns with vendors. Do not be afraid to switch over distributors if you don’t feel the issue can be addressed. Pick a reliable supplier of wholesale products as you don’t want to handle pending supply degrees and also running out of inventory. Your goal is to create supply chain resilience so you can run your company with confidence.
5. Place someone accountable of inventory administration
Many retailers function with limited staff which can be as less as 2-3 persons. However if your company continues to grow, you might wish to designate the function of inventory supervisor to a single person.
Your inventory supervisor can monitor all products and be first-in-charge when it pertains to getting restocks, discussing with suppliers, and paying billings. You’ll additionally intend to deal with them on producing a process for getting stock.
6. Prioritize customer satisfaction
Your goal is to prevent excess supply in your inventory. But consuming over reducing stock degree takes your focus from the most essential element of your business: client contentment. If your inventory runs too reduced and also consumers can’t purchase, it’ll result in lost sales. Also worse, you will lose customers.
That Was It
Remember that by using an efficient inventory management system, you can help decrease expenses, make your firm profitable, evaluate sales patterns and forecast future sales, and prepare for the unexpected. Your chances of profitability and survival improve with good inventory management of wholesale products.
It is time to take charge of your inventory management and stop your revenue from draining in unnecessary proceeses.
