Inventory management is an important topic for businesses. Without sound inventory management practices, your company runs the risk of spending too much on inventory. Worse, you run the risk of turning customers away by running out of inventory. Good inventory management is a delicate balance between stocking just enough and avoiding overstocks.
With these inventory management best practices, you’ll be able to balance the needs of fulfillment against the need to maintain adequate cash flow. You may be able to fulfill orders more efficiently while preventing out of stock messages. Try these today to improve your entire inventory management system.
7 Best Practices to Try
- Project inventory levels based on data. Use forecasting reports to adjust your inventory levels to match predicted sales volumes. This helps you avoid the “feast or famine” syndrome of over- or under- ordering inventory.
- Improve inventory accuracy through tracking. Use systems such as barcode scanners to track current inventory. Make sure items on the receiving dock are entered into the inventory system and aren’t just stuffed into bins or packed out onto shelves. Teach your staff to scan all items as they move into and out of inventory to ensure that items are tracked accurately.
- Prioritize new inventory purchases: Prioritize your time and investment around new inventory purchases that anticipate seasonal swings or customer demand. Keep only the best-selling items within your inventory.
- Transition to an ERP system: ERP systems today offer so much flexibility at an affordable price that it’s hard to imagine why companies continue using spreadsheets. Spreadsheets require manual data entry, do not synchronize easily with other systems, and require a lot of time to manipulate and use. Newer, automated systems can make inventory tracking so much easier and efficient.
- Track expiration dates: Use first-in, first-out inventory management (FIFO) to avoid discarding spoiled items. Track expiration dates for food ingredients, chemicals, pharmaceuticals, and other ingredients with a limited shelf life.
- Create contingency plans: Now is the time to build contingency plans to handle swings in demand. Line up suppliers for rush orders. Know where to go for an unexpected bump in orders of an item. Have contingency plans ready to handle surprises.
- Audit regularly: Keep inventory records updated. Take frequent stock counts. Audit your records and reconcile inventory with financial information on a regular basis. This will help you spot any gaps of problems and investigate them promptly.
Excess inventory is a sure sign that something is amiss in your inventory management practices. If you regularly struggle with excess inventory issues, try these best practices. With so much capital tied up in your warehouse inventory, you can’t afford not to.
Accounting Systems Incorporated
Accounting Systems Incorporated (ASI) provides ERP, accounting, and other software and systems to help your company grow. We focus on helping small to mid-sized companies improve operational efficiencies through the power of software and technology. Software such as Acumatica ERP and Sage 100 can provide the business intelligence you need to grow your company. For more information, visit our website, or call us at 803-252-6154.