One of the most challenging aspects of any business is figuring out how to keep your inventory at a good level. You don’t want to have so much inventory that you are overspending and can’t possibly get rid of it all, but you also don’t want to run out of inventory and be unable to fulfill the orders you receive. Both of those options can have disastrous results for your business and your relationships with your customers and the supply chain. If you can learn to manage inventory well, you will be on your way to a very successful career running your own business.
One of the major temptations that many businesses run into is the desire to stock more than they need. This seems reasonable because it can prevent you from running out unexpectedly, but it can get you in a lot of trouble if you overestimate your needs by too much. In general, it’s better to make sure you have what you need and to not keep your warehouse overflowing with unnecessary merchandise.
Overstocking will certainly happen from time to time as trends change or strange events occur in the industry, but as a rule it is something you want to avoid. Your goal as you stock your warehouse should always be to hit that sweet spot between over and under stocking, so you have exactly what you need. This takes time and practice, and the more data you have to look at, the easier it will be for you to maintain. When you are first starting out, do your best to make reasonable estimates so your stocking habits will start in a good place from the very beginning.
Understand Reorder Points and Lead Times
A lot of keeping your inventory in a good place comes from understanding the timing of ordering products. This is important because you should always know how much stock you need and how long it will take for new stock to arrive. A reorder point is the point at which your stock reaches a low enough point that you should initiate a reorder. This can even be done automatically if you have your system set up right. The lead time is how long it will take for the products you order to actually arrive at your warehouse. You want to make sure to line up your reorder point so that you will have sufficient time for the new products to arrive before you run out of your previous products.
When you have mastered reorder points and lead times you will be in great shape to order supplies with good timing. It can take some work to get your timeframes perfectly worked out, so you don’t experience an excess of products or run out of what you have. Make sure to adjust those times as needed until you have a system that works for your business.
Pay Attention to Trends
The good thing about inventory needs is that they tend to respond to trends in the market. That means that if you are on top of the trends you can have more insight into how much you should order and when. But staying on top of those trends can take a lot of time and effort to make sure you are doing it correctly. You need to invest that time so that you are always aware of what is happening in the market in the industry around you and how that might impact your business.
Doing market research is one of the best things you can do to learn about applicable trends to your business. This can help you learn about what your customers are doing and how they are spending their money as well as how your suppliers are being impacted. The more you know about trends, the earlier you will be able to react to them in a way that is beneficial to your business overall. Depending on the industry you are in, trends may have a major impact on the items you want to keep in stock at all, not just how much of them you want to keep.
Consolidate Your Data
In the process of running your business you will collect a huge amount of data and it is easy for that data to get disorganized and generally more difficult to find. By consolidating your data into one place, you can make it easier on yourself and have more structure to your records. This will mean that it is easier to track trends and pay attention to the ebbs and flows of your sales record.
While you are consolidating your data, you also want to make sure that you are keeping it organized and easy to follow. That means using headings and spreadsheets effectively to keep your data in line. The easier it is for you to use your data, the better it will be for your company as you will have a greater understanding of what you have and how your customers have been spending. It will also help you to track the supply chain.
Explore Other Fulfillment Options
When most people think about fulfillment they think about shipping from a warehouse, but that isn’t the only kind of fulfillment that is available. It’s important to recognize the many types of fulfillment options you have at your disposal that can help you to keep your inventory in a more reasonable situation. In addition to traditional warehouse fulfillment, you can also use third party fulfillment or drop shipping to help your customers get what they need. These options can help you to get products to your customers without overstocking yourself.
It’s important to make sure that you have systems in place that will help you to fulfill all of your orders efficiently no matter what fulfillment option you are using. One process that can make that easier is printing on demand. Print on demand simplifies custom orders, especially if you don’t have a ton of space. Finding creative ways to fulfill orders will make your life much simpler and ensure that you are able to keep your inventory numbers under control.
Perform Regular Audits on Your Stock
You can’t possibly keep a good handle on your inventory if you don’t know what you have and how it has been going. That is where regular audits can help you to have a better understanding of your stock and what is and isn’t moving. It will also help you to check for quality and make sure that nothing is being damaged while it is on your shelves. The better your grasp is on your stock in general the better it will be for your inventory practices and your ability to fulfill orders in a timely manner.
To perform an audit, you want to go through everything that you have and the data that surrounds it. You want to make sure that every product is where it should be and pay attention to when those products arrive and how long they have been in your warehouse. With that knowledge in hand, you can start figuring out how to best use your inventory and make sure that you haven’t missed any important restock points. This means physically going to the shelves and doing a visual check in addition to looking at data.
Stay on Top of Maintenance
One thing you probably haven’t considered when it comes to your inventory is how your warehouse maintenance can actually impact your inventory situation. Regular maintenance is essential to make your business run smoothly but it can also help you to keep your inventory visible, easy to access, and undamaged. As you make sure your regular maintenance tasks are taken care of, you will keep your warehouse functioning well and keep your inventory in the best possible shape.
You should do maintenance on a regular basis and you can use a schedule to make sure tasks are done on time. Your employees spend a lot of time in your warehouse and that means that they will be aware of its needs and how things work. This makes it easy to have them help with maintenance tasks and ensure that everything gets done on a reasonable timeline to keep your inventory looking good and easy to access.
Understand Your Goals
Your inventory is also strongly dependent on your goals as a business and how you plan to achieve them. And since that is the case, it is important that you actually know what your goals are and what you need to do to make them happen. Every time you assess your inventory, it’s important to make sure that you think about your goals and how the movement of your inventory is matching up with the goals you have for the future of your business.
If your inventory isn’t moving the way you need it to, or it is moving quicker than expected, it may be time to reevaluate those goals. Goals are important benchmarks, but they shouldn’t be set in stone in a way that makes it difficult to adapt as situations change. Being familiar with your goals and willing to change them as necessary will help you to manage your inventory more effectively.
Understand Your Customers
Your customers are one of the most important things that impact inventory, and it is important to know them and what they want and expect from you. Building customer relationships can take time and consistency, but when you do it well, it will positively impact every aspect of your business.
One important element of customer relationships is gaining their feedback and learning from it. You can’t simply ignore what your customers have to stay and still remain in business for very long. And as you get to know your customers better, you will come to understand the impact they have on your inventory needs. With this understanding you can make smarter decisions about everything you do when you are stocking your warehouse and adjusting your inventory. Your customers can provide you with invaluable information, so it is worth all the time and effort it takes to develop relationships with them.
Adjust as Necessary
Finally, you need to make sure that you have room for flexibility in all of your processes. Situations can change at any time and if you are unable to change with them, your business will not be able to continue to grow and thrive. Take all the information you have at your disposal and use it to know when to change and when you need to stay the same. If you can figure out the difference between those two times it will be incredible for your business and its ability to do well regardless of what is going on in the industry.
You should always make it your goal to pay attention to what is going on and make changes when you need to. This doesn’t mean being flighty or putting your inventory completely in the hands of short-term trends. But it does mean working hard to make the difficult decisions (and the easy ones) when you need to. As you work to build a stronger understanding of the industry and your place within it, it will do great things for your business. Controlling your inventory takes a lot of work but it can be rewarding when you start to see progress and your warehouse is never overpacked or in bad shape.
Your business depends on your ability to manage every step of the process appropriately. And that means making sure that you have sufficient inventory without having too much at all times. Figuring out that balance is challenging, and it takes time. But as you analyze your data and make changes when necessary you will begin to figure out the system and do better for your business in general. Learn about the needs of your company and keep your inventories in check so you can be sure to continue your trend of success and avoid the major pitfalls of running your own business.
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