Unless you’re a service oriented business, inventory is one area where most owners get flustered and frustrated because as simple it sounds, there are a lot of logistical concerns and number crunching when it comes to proper inventory management. You just can’t go to the back of the warehouse and start counting while writing everything down in a log book. That could’ve worked in the past, but it wouldn’t be the most accurate thing in the world now.
If your inventory is in shambles and your sales are suffering, there are ways to improve the situation. The steps aren’t as drastic as you may think. Here’s how to do it.
1. Get down and start counting
Before anything else, you have to get down and dirty if you want an accurate picture of your inventory. You just can’t eyeball it and do a guesstimate because this will wreak havoc on your projections and balance sheet. You have to physically count each and every item you have. Arm yourself with a barcode scanner and shoot everything in your stock that has a bar code.
You should install POS inventory software to handle this task, because manually entering everything in a spreadsheet is a recipe for going crazy. Plus, what if said spreadsheet gets corrupted data in it or deleted by accident? You’d have to do it all over again! Get a reliable inventory system in place that works with the barcode scanner to make your life easier.
2. Know what your bestsellers are
You and your staff have to know which items move and which stay put and gather dust. You can mark your inventory by putting colored stickers on them based on a code only you know, like red for hot item and grey for so-so. This way, whenever you schedule a physical check, you’ll know immediately if the inventory at the back tallies with the one in the system. Also, when the inventory for your bestsellers runs low, you’ll already have purchased a new batch to avoid a sales hit due to no stocks.
3. Be wary of bulking up
I know, this sounds like a term for bodybuilding, but the same principle applies. A bodybuilder “bulks up” by stuffing himself silly with food until he grows enough to warrant “cutting” measures, where he’ll go on a calorie deficit and do more cardio to shed the unwanted fat and weight. When it comes to stocks, avoid buying in bulk just because you can and just because the items are on sale. Identify first if these are part of your bestsellers or if not. Ask your sales team if they can move the items, and move them fast or else they’ll be sitting in your stock room, taking up space and not making you any money.
4. Hire an Accountant
Accountants can evaluate the reports generated by your inventory software better that anybody. They can crunch the numbers themselves and give you a forecast of what items you should be getting, when and at what volume. Sales forecasting is important, so don’t neglect the valuable information you can get from it.
Inventory management is an area if your business that you have to have total control over or else you run the risk of losing money. Employee theft and pilferage is a real problem, and not being on top of you inventory will empower them to commit theft, because they know no one’s really paying attention. If you want to improve you inventory management, install a system that can help you keep tabs on everything and schedule a regular and a surprise inventory inspection. That will keep your staff on their toes and minimize theft.