When it comes to inventory, the concept of “less is more” just doesn’t apply to sound business practices. It could also be shrinking your budget. According to Supply Chain Digest, U.S. retailers are currently sitting on about $1.43 in inventory for every $1 of sales they make. But overstocking your inventory with everything you could possibly need to meet customer demands also isn’t wise. In reality, controlling your inventory is a delicate dance that takes fine tuning to keep your cost in check. But how exactly does it all work and how can you find that perfect balance in your inventory? Here’s how to get started.
Buy small parts in bulk
There are times it makes sense to buy inventory in bulk. Audit your inventory to see which small parts your company uses regularly. For example, small silicone rubber o-rings in a variety of sizes can help meet the demand of a growing auto shop or medical device warehouse. Tracking that small inventory could also prove a nightmare, which is why it’s essential to design a process in advance like tapping your supplier with the task, says thefabricator.com. For example, a supplier can track what types of small parts inventory you’re using by designating specific containers for each part. The supplier comes by on a particular day of the week like a Monday to determine how much inventory you would need on a Wednesday.
Set threshold stock levels
Unless you have a dedicated person solely focused on meticulously tracking inventory, it’s challenging to know when to restock necessary items. However, setting a simple threshold stock level can help by setting the minimum amount of a particular inventory a company wants to have on hand, says the Houston Chronicle. Depending on the inventory and amount you want to keep on hand, software like Shopmonkey can assist in setting thresholds so you’re always replenishing your inventory without needing to stop what you’re doing.
Analyze your suppliers
No matter how organized you are with your inventory, it’s only as reliable as your suppliers. It’s difficult to predict and maintain the correct level of stock if your core suppliers are always late, or too early, with your inventory. Analyze which of your suppliers are the most reliable and how their performance and inventory delivery impacts your day-to-day business. Have you turned customers away because you didn’t have stock on hand? Did your employees work overtime to tackle a stockroom brimming with products you didn’t need yet? Once you determine which suppliers are problematic, ask them to adjust their schedules to fit your needs or find someone who can best serve your business, Business News Daily suggests.
Forecast your inventory and sales
Your inventory needs today may look totally different six months from now, but you can better predict it with inventory forecasting and suggested purchasing methods, says manufacturing.net. Your inventory management forecasting tools can show you which assets were in the most demand this time last year and any trends in sales patterns. If you’re not currently using inventory software, you can also look back through your own sales records to see the trends. However, the right software can also leverage data algorithms and sales patterns that extend past your own business and to the overall industry trends in your area.
However you decide to tame your inventory, make it a priority in running your business. Otherwise you could face years of headache and less-than-optimal sales volume because of an inaccurate supply of products in your warehouse.