When you explain what stock management is – knowing how much inventory you have, when to order more, and keeping everything in balance – it sounds relatively straight forward. But putting theory into practice is a lot more difficult, especially when you consider just how much stock most businesses must manage.
Manufacturers, retailers and merchant wholesalers in the US carry more than $1.9 trillion in inventory at any one time according to the US Census Bureau. What’s more, experts suggest that 90 per cent of a company’s inventory is stationary and needs to be stored somewhere.
This calls for effective and efficient stock management. But how can your business achieve this? Here are five things you need to know about.
- Inventory management systems
Even though every business will have some level of inventory management system, the growth of e-commerce, omnichannel fulfilment and global marketplaces have only added to its importance.
The very best inventory management systems will not only enable you to keep count of incoming and outgoing items but also identify high performing products, track shipping times and re-order low stocked goods. Inventory management systems can also integrate with POS systems to record every sale, order and return.
- Current and future usage
It is highly advantageous to have asset tracking as part of your inventory management system. This will enable members of staff to gather data about inventory usage as it moves through the organisation and generate in-depth reports for better analysis.
An accurate picture of inventory usage will then allow you to make projections for the future. If certain products are more popular during seasonal periods, you can ensure that they’ll always be in stock.
- Value and depletion
Do you know the value of your company’s current inventory or whether certain products generate more revenue than others? If you implement sophisticated stock control processes, you could allocate more resources to products with the greatest returns. This also pays dividends when it comes to tax and regulatory reporting.
Along with processes to maximise profits, you should also develop a foolproof approach towards inventory depletion. In businesses where the age of stock is a consideration, you’ll need to know which products should be shipped or moved first.
- Physical space
Even if you have to re-order stock that’s running low, you’ll still need enough space to store it safely and securely. But this causes another major inventory management issue – overstock.
As a result, you could be faced with the possibility of moving unneeded inventory quickly to make room for in-season products. Its all about finding the right balance.
- Price forecasting
It goes without saying that supply and demand impacts the price of goods and services for both inbound and outbound stock – prices could rise for in-demand items or go down for leftover inventory.
However, with price forecasting for available, committed and future inventory, you can accurately plan and control stock levels. You should also be able to make broader revenue calculations based on your analysis.