The inventory solution you use does not make any difference once you are not taking advantage of the best inventory management techniques available. Do not forget that inventory management is an important aspect of running a business because the inventory in stock is tied-down fund until it is sold for a profit.
The following are a few inventory management techniques that will save you money:
1. Practice FIFO
The principle of first in, first out needs to be applied in the management of inventory for efficiency. The stock needs to be arranged in a way that old products are sold before new ones. This will prevent the business from losing money should a product expire when it ought to be sold a long time ago.
Even in a case where the products are not perishable, there is a tendency that it will get worn-out the longer it remains in the storeroom. Avoid having a product in your hands which cannot be sold by practicing FIFO.
2. Maintain Good Relationship with Suppliers
One other good inventory management technique is to maintain good relationships with suppliers. When you are in good terms with suppliers, they will be more open to helping you solve challenges that come up.
For instance, you may notice that an item in your store has not been sold for a reasonable time, rather than hold on to it until it wears out, you can liaise with the suppliers who can help you sell the same product to some other person who needs it. This strategy allows you to free your storeroom of slow stock.
3. Audit Inventory Regularly
The importance of reconciling what you have on paper against what is physically present in your storeroom cannot be overemphasized. A regular audit ensures that things are still in place and that the business is not losing money through theft of goods.
Should you decide to count inventory physically only at the end of the year, it will be difficult to pinpoint where something went wrong should there be any issues.
4. Set a Minimum Stock Level
Part of good inventory management technique is to set par levels for products. This ensures that you do not have to deal with a product not being in stock when a customer orders for it.
All products do not go at the same par level. For instance, if product A sells 20 pieces daily and product B sells 50 products daily, it will not make sense to use a minimum stock level of 40 for both products.