Inventory control is an integral part of any business that sells products to consumers. However, it is often overlooked by small businesses. Having few items to sell is no excuse for ignoring inventory control. No matter how many items you manage in a warehouse or store, inventory control must still be performed regularly.
Here are some simple ways that small businesses can implement to improve their inventory control.
1. Know how to forecast inventory demand
Accurately forecasting consumer demand for your inventory is essential in order to avoid shortages or excess stock, as well as unnecessary procurement. To do this inventory control strategy properly, you can use a few ways below.
First, you have to go through your sales history. For example, to forecast demand in September 2020, you should look at the sales history in September 2019. However, keep in mind that the demand may be different, as you will need to look at changes in the current situation. Demand in September 2020 may be a little slack due to the impact of COVID 19, unlike last year.
You’ll also have to find out what’s trending. Consumer demand can change very quickly, depending on trends, economic conditions, and other situations that affect it. The results of your observations will help you figure out the type and quantity of products you should provide in a given time.
This one is perhaps the most practical way to forecast inventory demand. Real-time information about your stock levels will give you insight into how fast each product sells. From here, you will also be able to easily find out which products sell best and which sell slowly.
2. Use the FIFO approach
No matter how small your business is, letting your goods pile up for a long time in the warehouse will add problems to your inventory control. Therefore, it is important to prioritize items that sit the longest in your warehouse or store. This technique is called the first in, first out (FIFO).
Make sure old items sell out first than the ones arriving at your warehouse or store later. Besides doing this technique, you can also implement the first expired, first out (FEFO) technique, especially if you sell perishable products like food, food ingredients, medicines, or any other items with expiration dates.
3. Identify your slow-moving items
Take a look at your goods. Is there any item that hasn’t been sold in a long time? Perhaps you should consider stopping purchasing it the next time you place orders from your supplier. However, you can still turn your slow-moving items into popular ones.
The easiest way to turn low-turn items into fast-turn ones is to discount them. If this doesn’t work, you can sell them along with popular items as an add-on. This technique is called bundling. Another way is to place these unpopular items at the front, like on counter racks, or in every corner of the aisle so that customers can easily find them.
4. Perform stock audits (stock taking)
Inventory control must involve stock taking in it. This means performing physical audits all of your merchandise and making sure that the quantity is the same as it is on your records. Stock taking can be conducted at any time, depending on your sales cycle. Some do it once a week, once every three months, twice a year, or once a year (usually at the end of the year).
5. Assess your supplier performance
An unreliable supplier can have a negative impact on your inventory control. If your supplier is frequently late with deliveries or delivers wrong items, it’s time to take action. Communicate with your supplier to find out their reasons, and if they don’t address the issues, then you should find a new supplier whom you can rely on better.
6. Use an inventory control system
Using an inventory management system is the most effective way that covers all of the inventory control tips in this article. This tool allows you to track stock levels at any time in real time, analyze inventory turnover, speed up product searches, simplify stock taking, and so on. To sum up, everything you need to improve your inventory management is in this system.
7. Analyze your sales
It is also important to know your sales conditions. It is more than just knowing which products are selling and which are not. You need to know when your sales spike, when your sales decline, what causes it, and so on.
Find out if your promotions have been successful. Have they increased your profits, or have you suffered a loss instead? See if there are any opportunities you can take to level up your sales.
The good news is ClickWork’s inventory management system is integrated with the sales management system as well. Therefore, you can view your sales as well as your inventory data in a single view, through a configurable dashboard.