By Don Amato
Regardless of the type or amount of products you sell, the more buttoned-up your inventory management processes, the simpler it is to build the well-oiled machine that helps you achieve maximum profitability, while giving customers the level of service required to purchase repeatedly. Here are five ways to simplify your inventory management processes.
1. Identify What’s Working (and not) First
All businesses that sell goods must deal with inventory management to some extent, but the problems and solutions associated with it vary significantly based on the efficacy of the current process, and business goals.
Though there are plenty of quality, low-cost inventory management tools and apps that can provide the real-time inventory views multichannel commerce demands, it’s imperative that you first examine your businesses metrics (including sales, processing and fulfillment rates, and inventory on hand) to get a sense of where things are “broken,” and where they’re working well. Once you have that insight, formulate well-defined goals related to changing your current system, as well as how you’ll measure potential improvements.
2. Focus on Ways to Save Time
Time can be one of the most significant costs you bear in the process of inventory management, but it is fairly easy to manipulate in your favor depending on how easily you can realize efficiencies that ultimately reduce overhead costs.
Take a common-sense approach to inventory management with inexpensive ways to eliminate redundancy. Developing custom-printed return labels to send with every customer order, for example, could reduce the number of customer service inquiries received about how to return an item. Since the same label can be tailored to include the information warehouse staff needs to receive the item swiftly back into inventory, it could mitigate the lost opportunity you’d otherwise experience.
3. Visually Distinguish Your Inventory
Carrying too much inventory of products that don’t sell quickly limits your cash flow, costs warehouse space and hinders efficiency. Distinguish inventory by core products, which are your “bread and butter” items you never want to run low on, from non-core products, which may be seasonal or trendy, or those that sell infrequently.
Strive to establish product life cycles for non-core products to proactively reduce the chances of holding too much non-core inventory as peak season winds down. The use of simple visual cues like colored inventory labels can also be invaluable in helping identify where there’s an overage of non-core inventory, signaling a need for time-sensitive promotions aimed at moving the goods out of stock.
4. Focus on the Importance of People
Inventory management is a critical business function in part because it has a direct and significant impact on customer experience. With that in mind, one of the simplest ways to better your inventory management is giving the appropriate attention to the “human” aspect it entails — both in your business and your vendor relationships. Inventory management staff must be detail-oriented, have a sense of urgency, and be equipped to proactively recognize and solve problems. Hire staff you are confident have these qualities, and empower them to share ideas for how to better processes.
Of equal importance are the people involved in your supply chain, including vendors and shipping providers. Instead of focusing on price alone, prioritize your business with the providers who are service-oriented, and will focus on the important aspects of a symbiotic relationship, including how to expedite the process of ensuring you have the inventory you need when demand is high.
5. Choose Systems That Work in Tandem
Regardless of the technology you may utilize to sell goods and manage your inventory, both online and off, ensure that you select systems specifically built to communicate well with others, including your business’s existing internal systems and those third-parties you outsource critical business functions to (like fulfillment centers, bookkeepers and accountants) may use.
Technology that is custom-designed to work with other popular systems may not be the cheapest, but the cost of a discrepancy or error in your inventory and related financial systems will be far greater than the extra money you may pay.
Managing inventory is a business function that may never be 100 percent within your control, but with the right systems in place, you can ensure that your operations are geared toward gaining the inventory-related efficiencies that ultimately boost your return on investment.