Inventory Management Tips and Techniques That’ll Save Time and Money
Take your business to the next level by implementing these inventory management tips and techniques because they’ll save you time and money, and who doesn’t like that?
Tim Cook, CEO of Apple, made his name at the company by reducing the amount of time they held stock from months to days. His slogan was “Inventory is fundamentally evil“. He saved millions of dollars for Apple in the process.
Inventory management can make or break a company. Take your business to the next level. Implement these inventory management tips and techniques to save time and money.
Minimum On-Hand Levels
Setting minimum levels for each product makes it easy to know when to re-order stock. When stocks fall below the minimum level, you need to raise an order. This simple process can be easily explained to your staff and easily followed.
The challenge is in deciding what that minimum stock level should be. You should take into account the rate of sale, how quickly it will get replenished after ordering and the supplier’s minimum order quantity.
Regularly review how effectively the minimum on-hand levels are meeting your needs. It’s important to avoid out of stock positions and large amounts of slow-moving stock. Achieving a balance is the key.
Supplier Performance Management
Keep records of supplier performance management. Monitor lead times from order to delivery. Are lead times short and do they deliver as promised or are they late.
Record the accuracy of delivery against orders and delivery documentation. Do invoices match orders and delivery documentation? Use performance management records in negotiations when you need to get leverage to improve supplier performance.
Supplier Collaboration
While performance management might seem to be a club with which to beat your suppliers, it can also be part of a positive relationship. Recognize and reward good supplier performance with preferential treatment. Give good suppliers their preferred delivery slots and pay them early if you can.
Work together with suppliers to look for win-win opportunities. Do joint forecasting. Work together to reduce inventory in the supply chain and look for cost reductions for both parties.
Practice FIFO
Food businesses know that you have to shift perishable goods through the business on a first-in-first-out basis. For example, dairy products only have a shelf life of a few days so it has to get to the shelf with no delay. This principle is also true for non-perishable goods.
Packaging can get worn. Even non-perishable products can deteriorate with age. Packaging can date as can promotional information.
Have a strict first-in-first-out process with new stock being placed behind old. This will help reduce spoilage and damage.
Inventory Systems
Where possible use an inventory system or merchandising app. With large amounts of data inventory management is an obvious area where systems can be of help. A good system is one of the key tools of inventory management.
Cyclic Counts
Having accurate data is critical for effective inventory control methods. Errors will cause problems such as out of stocks, lost sales, and poor replenishment ordering.
Carry out regular periodic counts to check and correct your data. This can be done on a cyclic basis whereby part of the inventory is counted every day or every week. Over a period of time, such as quarterly, all the inventory will be checked.
Inventory Management Tips Need Action
These inventory management tips can make a difference to your inventory management. The important thing is to start implementing good inventory management techniques soon. Weak inventory control methods cost you money and time.
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