Whether you run an eCommerce business or have a brick-and-mortar store, inventory management is an element of everyday operations. And it’s definitely an element that you have to get on top of if you want to grow your business and avoid a lot of needless frustration.
When you manage your stock incorrectly, you can unintentionally tie up a lot of your capital in overflowing items. That will leave you unable to invest in newer, more popular ones. You also run the risk of running out of your most popular items at the worst possible moment. And frankly, your warehouse can quickly become a labyrinth no one wants to venture into.
To ensure you are aware of how many items you have in stock at all times and where these items are located, take a look at our four tips for streamlining inventory management.
Create Appropriate Categories
First, you want to group your inventory in a way that makes sense to your fulfillment team. You can choose to do this based on frequency of sale or based on item value. Or, you can even choose to merge these two categories.
Your groups can look something like this:
1 – items that you sell most often and that you need to order from your suppliers more frequently
2 – items that you sell the least often
3 – items that fall somewhere in between the previous two groups
You can then place items from Group one to the area of your warehouse that is easiest to reach. Items from Group two will belong in the back, where they will take the longest to ship out.
Make sure all of your teams (sales, marketing, fulfillment, customer support) are aware of this grouping. They’ll need to know which items to promote more often and which ones you are most likely to have “backups” of in case you need to send out replacements.
In order to save yourself a lot of inventory management hassle, you can also consider consigning your inventory to a larger store. This can work especially well if you sell products you have manufactured yourself or if you are able to work with some of the larger stores that are more likely to turn your products around quickly.
While you won’t be paid for your items up front, consignment can be a great way to clear some space on your own shelves. Let someone else handle both inventory and sales.
If you’re in need of some ready cash, this is not the best business model. But if you can, consider consignment, as it can prove to be a reliable income source in the long term.
Track Your Inventory Based on the Right Metrics
Depending on the kinds of products you are selling, you will want to track your inventory differently.
For instance, if you are handling perishables, you certainly want to consider their “best by” and “sell by” dates. You’ll need to ensure that your oldest products are the ones that get shipped out first.
This will also mean you need to figure out a floor plan that ensures that the newest stock of a certain item is placed behind items that you already have on your shelves. You should also make it a point to regularly turn your stock over, so to speak, and ensure that there are no stray items left behind.
Non-perishable items can also be tracked by lot or serial number. As long as you know how to track down a specific item at all times, your tracking metrics are valid.
Do Regular Audits
Doing inventory audits is not easy or fun, but it’s still a vital part of inventory management. It will help you ensure that all your numbers tally and that all your stock is in good order.
Do your audit both physically – i.e., walk through your warehouse and storage and count everything – as well as in your inventory management tool. You might notice simple discrepancies. For example, an item might be entered in the wrong color, or someone might have forgotten to update the figure for another item.
By scheduling regular inventory audits, you’ll ensure there’s no unpleasant surprise waiting for you down the line, and you will also be ensuring that all of your numbers tally at all times.
Inventory management comes down to organization and focus. While there are plenty of tools that can help you stay on top of it, you should never forget about the human factor.
Make sure all of your staff is trained well. They need to know not only how to use your tool but also how to troubleshoot any errors and how best to organize your inventory. Sometimes, the simplest of tweaks can save you a lot of time. And that can mean the difference between stellar user experience and losing a customer.