If you run a company reliant on stocks of products to fulfil customer demand, you’ll understand the risks involved in not being able to maintain consistent stocks.
But you may still wonder why is inventory management important to your business?
When your bread and butter is the product that you sell, you need to keep orders coming in to replace stock as it sells through.
When you have hundreds or even thousands of different SKUs in your product range, how do you keep consistent coverage to keep up on sales?
You need strategies to manage inventory effectively.
Here are 5 of the most helpful tools and strategies for maintaining your stock levels and coverage in a more effective way.
1. Use PIM Software to Manage Inventory In Your Business
If your business does not utilize PIM, you may wonder what is PIM?
Product information management software allows you to monitor your stock at every step of the supply chain. You can track every SKU from the order through to sales.
Finding the right PIM software is essential. Find a system that can be integrated with other applications such as your CRM or website.
2. Carry Out Regular Stock Counts
Your inventory has a value. You may have stock in multiple locations. The more spread out your stock, the harder it can be to control.
Having stocktakes or line counts on specific SKUs on a rolling basis will ensure that you have consistency within your inventory. It will help identify stock loss and help pinpoint causes. Carrying out inventory stock counts will help you make sure you are not holding onto obsolete lines while giving a measure of your assets.
3. Know Your MOQs
Minimum Order Quantities (MOQs) are defined by manufacturers and suppliers. This is the smallest order of a specific quantity that they will supply.
Generally, items that cost more to produce will have smaller MOQs than those that are cheaper to make. This means low-value items often need to be purchased in larger bulks.
Understanding MOQs is essential in keeping your supply chain moving. Monitoring the speed of your sales and factoring MOQs and supplier lead times when placing your orders is essential.
4. Stock Review
Applying simple inventory management techniques such as stock review is useful in smaller businesses. Take your on-hand stock and compare it with your projected sales.
This is often a manual process. However, it can be automated to determine minimum stock levels.
5. Use A Safety Stock Formula
Having a buffer in your stock levels means you have an emergency stock buffer that you can use when you are about to sell out. You need enough stock to fall back on, but not too much that it ends up increasing holding costs.
Calculate the difference between these two equations to work out how much stock to hold:
- Maximum daily usage x your maximum lead time (in days)
- Average daily usage x your average lead time (in days)
What’s Your Best Inventory Management Technique?
What stock challenges does your particular business face, and how do you manage inventory in your company?
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