Process & Business Expansion
Posted 16 May 2020, Editor's Desk
Tips for Retailers to Manage Inventory Better
Inventory management is one of the most important parts for a retail business Paying attention to your sales data and inventory details is very crucial for the smooth running of your business operations. The objective of inventory control is to strike a balance between sufficient stock and over-stock. The stock maintained by a business entity at a particular point in time should be sufficient to meet the production requirements so that uninterrupted production flow can be maintained at all times.
Here are some top inventory management techniques for entrepreneurs:
1. Use Barcode Reader
Segregation of stock proves to be the top inventory management technique because: -
A. Saves time in picking and packing of the products.
B. One can easily find out which items need reordering by just looking at the designated section.
C. Popular FIFO (First in First Out) inventory system can be easily executed.
3. Improve stock ordering
Ordering the right products by keeping your customers’ needs in mind is indispensable to ensure proper inventory management. For this, it is important to keep an eye on how products are moving and to observe how customers are interacting with your merchandise. For example, the average normal usage of a material component A is 50 units per week.
4. Physical Stock Check
On hand inventory
The bestselling products
Products to be reordered
It signifies ‘at least how much to stock’. Every business entity must determine the minimum level of stock required by it. It is the lowest level of material stock, which must be maintained in hand at all times so that there is no stoppage of production due to the non-availability of stock. Suppose the average normal time taken to get an order from supplier to the stores, known as lead time, is 5 weeks. Here, the minimum stock level that must be maintained all the time for material A would be 450 units – (50 units × 5) = 200 units.
6. Know Maximum Stock Level of the business
It is important to then determine the maximum level of stock for a particular business. It signifies ‘up to how much to stock’. It is the highest level of quantity for any material/inventory item which can be held in stock at any time. Any quantity of stock beyond this level leads to an extra amount of expenditure due to the engagement of funds, cost of storage, obsolescence, etc.
In any business, some quantity of stock may be kept for the contingency to be used in case of sudden orders. This stock is known as buffer stock.
Almost all businesses today are moving their base online. When the flow of sale and purchase rises, the retailers need to keep track of the top inventory management techniques discussed above to create a flexible functioning of the business.