Help! Inventory stress.
By: Explect, February 13, 2023
When you decide to start your own business, you are controlling everything. This means that you may want to sell products in a way that fits the lifestyle you want to lead. It gives you the opportunity to decide when to put your products in “sales mode.” But it also puts you in the driver's seat when questions need to be asked or decisions need to be made. If you always have a product available for sale, you can end up in a state of uncertainty about selling, and then inventory management becomes important. You want to avoid having too much or too little inventory. Otherwise, you'll just waste money and miss out on sales. So, it's critical to monitor what you have and how much it's worth.
When you're just starting out, it's important to understand that good inventory management can help reduce costs and increase profits. So make sure you know which items are popular and which ones earn you the most money. You also need to know how quickly items sell and how long it takes to get new items. Otherwise, you'll panic and order too many items, which is just a waste of your money.
We give you six tips to get everything in order.
Bring (and keep) structure to your inventory
To get started well, it's critical to know what you have on hand. To keep a good overview of your inventory, there must be a logical structure that is clear to you and your employees.
Set your priorities
You need to be smart and determine which items you always need to have in stock and which ones you can do without. It's helpful to decide for yourself which items need a safety stock, so you never run out. A big problem with this is preventing damage during storage and transport. One solution is to set a damage margin. This is a certain percentage of the value of your inventory that you reserve to cover any damage. This way, you prevent damage from having significant financial consequences, and you can continue to operate without suffering major losses. But make sure you regularly review and adjust your damage margin. Otherwise, it won't work properly.
Choose the inventory management method that suits you
A handy trick for managing your inventory is to use an inventory management method. Make it clear to everyone in your company which method you use. Popular tricks are JIT (Just In Time), FIFO (First In, First Out), and LIFO (Last In, First Out).
Ensure fast, reliable suppliers
To keep your inventory at the right level, it's important that you can rely on your suppliers. Be selective in searching for a supplier and make sure they adhere to the agreements made.
Take care of the administration
It's critical to have a good idea of the number of products your company has in circulation to align your purchases with sales as well as possible. Make sure you keep your administration up to date so you don't buy too much or too little. Also, consider whether the use of ICT (such as barcodes) can add value to your business. A Warehouse Management System (WMS) such as those used in supermarkets can offer many benefits for inventory management.
Regularly take stock
Regularly check whether the actual inventory matches the administrative inventory. How often you do this depends on the type of business you run. Don't underestimate the effort involved, this is also called balancing. It requires a high degree of accuracy to accurately map the actual inventory. You don't have to determine the exact value of your inventory for the tax authorities, but a good estimate is expected.
There are many programs and tools that can help you automate things. But keep in mind that you don't need such a fancy system like Apple or anything. Just choose something that fits your business and is not too complicated.
Make sure to regularly check and update your inventory. Otherwise, you risk running out of stock or having too much inventory that nobody wants to buy. And that's not the goal of your business. So, to sum it up, inventory management can make you money and grow your business. Just start with an inventory and determine the best inventory levels for your business. And then everything will be fine, right?