Do you feel like you’re in control of your inventory? Or is your inventory controlling you? Manufacturers worldwide struggle with feeling like they’re never quite on top of their inventory control.
Either they have too much of one product and not enough of another or they’re frequently out of stock...but whatever the problem may be, there’s never enough of what they need to satisfy the demand.
Great inventory control means that you have enough product on hand to meet and exceed customer expectations for market demand. If that sounds like too tall of an order for your company, take heart. With the right approach to inventory management, you will be able to say “Yes” to an order more times than you would have to say “Wait - I have to check on that.”
Here are 3 Inventory control tips that your business can benefit from:
Inventory Control Tip #1: Develop a Stock List
When you manufacture or order products, the goal is to sell them. But sometimes things do not sell. They languish in dark corners of the warehouse collecting dust and cobwebs. To separate the salable items from the items to be liquidated, it helps to develop a stock list.
A stock list is a list of products, annual orders, total quantity ordered annually, and the total annual cost of goods sold. When you begin tracking items in this manner, it’s easy to see at a glance what you should keep more of in your warehouse and what should be liquidated. Keeping the cost of goods handy helps you keep in mind the cost of your investment into the items. If you have to put the item on a discount, you can easily calculate the discount using the COGS as the bottom line number.
Inventory Control Tip #2: Liquidate What Isn’t Selling
Unfortunately, inventory rarely increases in value. Most inventory decreases in value, and unsold inventory drains valuable capital from your business. It takes up warehouse space, requires inventorying at certain points in the year, and keeps you from stocking more of what sells.
Each business must set parameters for how long to keep items in stock before liquidating them. Some items may be kept even if they do not sell frequently because a valuable customer orders them or because you are the only company where such an item is available. But for the most part, anything that’s been sitting around for months or years is ready for liquidation.
Liquidating stock doesn’t necessarily mean a sale. You can:
- Transfer items to a holding warehouse until you can figure out how to sell them.
- Recycle parts or materials into new products.
- Return items to the manufacturer.
- Use unsold goods as a marketing tactic; add them onto other product sales as a free gift with purchase or freebie as an incentive for customers to comeback.
- Offer your sales team an incentive to sell the back stock.
When all else fails, you have two choices: drop the price to get rid of excess inventory or donate it somewhere. While selling below COGS isn’t ideal, if you must do so in order to get rid of inventory that’s taking up floor space for more profitable goods, it may be the right move. Some specialized materials cannot be donated to a nonprofit, but many industries can find a willing charity to take their back stock. Building materials can be donated to places like Habitat for Humanity; food can be donated to food pantries, and other creative solutions exist for many goods.
Inventory Control Tip #3: Organize Stock According to Frequent Sellers
Once you have a stock list, you can do quite a lot with it. For example, you can use it to reorganize your warehouse so that frequently requested items can be located closer to the shipping center. By relocating popular items closer to the packaging and shipping center, you minimize the time it takes to pick and transport them.
6 Ways to Improve Inventory Accuracy
Looking for more ideas to improve your inventory management? BAASS Business Solutions offers a free white paper, 6 Ways to Improve Inventory Accuracy. It’s filled with useful tips, tricks, and hints to make you feel in control of your inventory.
BAASS Business Solutions
At BAASS Business Solutions, we seek to help our customers improve processes to become more profitable. We take the time to understand the needs of your business and help you select software that will improve efficiencies, service, and profitability. Warehouse management is one of our areas of concentration, and we can help you choose the right solution for better inventory control. For more information, visit BAASS or contact us.