Consumer confidence is way up in the United States as it rides the wave of near-record low unemployment rates which are hovering around 4%.
Given the bullishness of consumers today, many businesses are experiencing records sales in 2018 and expect to maintain momentum going into the new year.
Just because times are good though doesn’t mean that your business is destined to be successful. Being successful takes planning and hard work, even in the best of times.
For retailers, leveraging outstanding inventory management techniques is particularly worthy of forethought.
Therein lies the purpose of this article.
Below, our team is going to share with you 9 inventory management techniques that can completely revolutionize your business’ productivity and of course, its profitability.
1. Build an Awesome Relationship With Your Supplier
Your supplier is always going to be an integral part of your success if you’re a retailer. They’re the ones that will make sure you have stock to sell and will be the people you need to work with if you run into problems.
To make sure that your supplier makes your business better, do your best to build an awesome relationship with them.
This typically comes from communicating your needs clearly, being loyal to them, and just practicing good business relationship techniques (ex: sending cards during the holidays).
If you and your supplier are tight, you can negotiate minimum orders, you can get inventory rushed to your store if a demand spike is encountered and more!
2. Always Analyze Your Supplier Performance
If despite your best efforts your supplier always seems resistant to your needs, find a new supplier and cut them loose.
Most businesses will only ever be as good as the suppliers they’re working with. Make sure yours isn’t dampening your ability to be successful.
3. Set Minimum Inventory Thresholds (Par Levels)
Par levels is a term in inventory management that is used to describe minimum inventory thresholds that your business always needs to have in stock.
The second a product falls below your set par level, you know that you need to order X more to meet par.
With par levels in place, you will have systematized one of the most important aspects of running a retail business. Consequently, you can delegate the task of placing orders to lower level employees.
4. Prioritize The Stock That You Sell
It’s important that you look to move your oldest stock first and your newest stock last. This is particularly important if you’re dealing with perishable merchandise.
To do this, always keep new stock in the back, outside of customer’s reach until old stock depletes. If you don’t sell products out of a consumer-facing store, ensure that your warehouse team knows to ship older inventory prior to shipping the new stuff you’ve received.
Remember, even with non-perishable goods, product packaging often changes which may deem old inventory obsolete faster than you think.
To be safe, make sure your team embraces the “first in first out” (FIFO) mindset.
5. Make an Effort to Predict Demand
Predicting demand is a tricky thing that’s almost impossible to get right consistently. Still, you should make an effort to put thought into each of your products and how well they’re liable to sell during certain periods.
If you have a product that sees spikes seasonally, let that affect the amount you order before that “hot season” hits. If you’re foreseeing that a certain product is likely to “go viral” (think fidget spinners), consider ordering a surplus amount up front so you’re not caught empty-handed.
6. Get Ahead of Problems With Systematized Solutions
Problems happen all the time when it comes to inventory.
Warehouse overflows, overselling your stock, cash flow shortfalls, discontinuations from manufacturers, etc.
What are you going to do when these situations come up?
The sooner that you think about what could go wrong and put in place a policy to deal with these shortfalls, the less likely you’ll be to get caught off guard.
7. Keep a Database of Your Product Information
As you grow, it can be easy to lose track of your inventory. That could lead to you losing products to theft of other occurrences without you even knowing.
To ensure that you have a solid grasp on the products you purchase, put a system in place that allows you to capture key information surrounding your products as they enter your warehouse.
Information like SKUs, suppliers, countries of origin, barcode data, and lot numbers are all things you’ll want to track.
8. Try Dropshipping (If Appropriate)
The best arrangement you can have as a retailer when it comes to inventory is not needing to carry inventory at all. This is accomplished through a process called dropshipping.
With dropshipping, your supplier ships items direct to your customers as soon as they purchase goods from you online. That means no needing to pre-purchase merchandise, manage the liability of storing goods or needing to deal with losses.
If dropshipping isn’t possible for you and you need to self-store inventory, there is more information you can view here on expanding your storage space to fit your stocking needs.
9. Use Inventory Management Software
When you’re first starting out as a retailer, you might be able to get by with just tracking your inventory manually on spreadsheets. That’s not a process that scales very well though.
To make sure that your business is built on a foundation that can prop up your future success, one of the best inventory management techniques we can recommend is to adopt inventory management software as soon as possible.
With inventory management software, you can optimize your stock tracking and ordering which means less pressure on you and your team and fewer mistakes.
Wrapping Up Inventory Management Techniques for Your Business
From building good relationships with suppliers to setting par levels, there are plenty of inventory management techniques you can utilize to help your business run better.
To learn more about techniques you can utilize to get the most out of your business, check out our newest content on At Your Business today!