As you grow your business, you begin to face many new challenges that never affected you before. Should you hire a wholesale distributor? Do you need a larger staff? And most importantly, how should you manage inventory? Effectively managing inventory is important so you can ensure you always have just enough of your products in stock to fulfill orders without wasting money on excessive amounts of product. How can you master this crucial business skill? Follow these tips:
Collect as much data as possible.
The difference between businesses who efficiently manage their inventory and those that don’t is the amount of data that they collect and analyze. If you want to manage your inventory like a pro, gather as much data as you can. Look at what products are selling more than others on a weekly or monthly basis. Determine which customers are buying the most and which have slowed down over the last few months. Do you notice any trends in your data that show slower months or times of the month? Keep track of this as well. All of this information will help you make smarter decisions when it comes to your inventory, but you have to get in the habit of collecting it first.
Work together.
Larger companies will have separate sales and inventory management teams, but they should still work together even if they are in different departments. Why? Let’s say the sales manager fails to tell the inventory manager that he is asking his sales team to promote a specific product of yours. Because of the sales team’s focus on this product, demand begins to skyrocket—but no one ever told your inventory team. This means you probably won’t have enough inventory to fulfill the orders, and will therefore leave a bad impression on these clients. It’s essential that these two teams work together so the entire process flows smoothly.
Know when to call it quits.
Businesses have a hard time getting rid of inventory that didn’t sell as well as they expected. If you have products wasting space because they didn’t sell even when you offered them at a discount, you have to know when to call it quits and get rid of the items. Getting rid of these items clears up space in your warehouse for inventory that actually does make you money.
Create a system.
Before you begin selling to major retailers or distributors, spend time setting par levels for each of your products. Par levels are the minimum amount of product you must have available at any given time. Let’s say Product A has a par level of 1,000 units, but an order just went out that brought your inventory of Product A down to 600. This will signal to you that it’s time to reorder since it’s below the pre-established minimum level. Creating this type of system is recommended because it makes it much easier to control reorders.
How do you manage your inventory? What inventory challenges did you have to overcome when you were growing your business? Share your stories in the comments below!
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