Inventory management is a crucial aspect of running a business. In fact, it can be argued that it is one of the most pertinent systems in any business operation. Faulty inventory management yields an array of dire consequences.
For starters, your customer service will get affected. Either you fall behind in keeping with the demand from customers, or you end up supplying subpar products. Either way will cost you.
Poor inventory management compromises the integrity of your products. The longer your stocks stay at the warehouse, the more they become susceptible to damage. If you do not want to risk delivering goods of poor quality, you will have to dispose of compromised resources. To avoid these possibilities, here are best practices for your reference.
Consistent quality control
There are many ways to ensure that your products’ quality is not compromised. For example, if you’re selling refurbished cars from various sources, you want to work with a flatbed freight provider that has a proven track record in the industry. Safe product transport should be your utmost priority. It should factor into your quality control system.
You do not want your car to reach your storage with dents and whatnot. That means you’ll incur additional costs for repair instead of the product being ready to be sold to customers. Storage safety should be on-point too. And when it’s time to release your product, it should be double-checked by your staff.
Do not rely on old-school ledgers. Or run-of-the-mill inventory practices. It’s time to optimize.
The first order of business is to equip your staff with reliable inventory management software. Make those processes automized. Doing so will make inventory management not only easier but more efficient too. You might even get the chance to cut labor costs via automation. You won’t need many people to manually count the products you have in stock because software can warn when your inventory has reached the threshold where replenishment is necessary. Or when certain products are about to go bad, if you’re selling perishable goods.
Pinpoint the best inventory management system
There are different inventory management systems at your disposal. Basic options include continuous review and periodic review.
Continuous review is where you order the same number of items every time you replenish your stock. You continuously check your inventory for when the threshold for replenishment is reached. Meanwhile, with periodic review, you based your next order on how many products you still have in stock after a certain period. There are pros and cons to each of these approaches. You must determine which system suits your kind of business best.
You need a reliable counting cycle system. That is to ensure that your stocks do not reach the critical level in which you’ll be at risk of running out of products. Ideally, you have a small team devoted to this system.
Determine the frequency of your counting cycle. It should be based on how frequently you replenish your stocks. As well as the number of products your storage receives within a specific business cycle. Once you’ve ascertained the most fitting frequency, the next thing to pinpoint is what counting strategy to follow.
Do you count based on the nature of items in storage? Or their value? Decide depending on what products you sell.
Make inventory management a priority
The first mistake a budding entrepreneur makes is not dealing with inventory management in the most earnest ways. Sure, you want to focus on marketing your products. You have a lot of ideas on how to tap your target audience. But those efforts will go to waste if your inventory management falls short.
You can get people to clamor for whatever it is you’re selling. But if you cannot keep up with the demand that you encouraged, you’ve failed.
On-point inventory management will steer your business in the right direction. You will prevent losses from damaged goods. You will cut unnecessary labor costs. And you will ensure that your customers are always satisfied with what you deliver.
Keep in mind that there are multiple ways to lose a customer’s trust. If you sell them a product of poor quality, chances are they won’t buy from you again. The same goes if you do not have what they are looking for, which you’ve actively advertised, in stock. These risks are directly traced to the inventory management system you have in place.
An unhappy customer can persuade ten or more prospective customers to stay away from your business. So keep your customers happy.