7 Tips for Your Inventory Management: Get the Full Overview of Your Inventory and Improve Your Order Flow Today
By Rackbeat February 3, 2023
Are you tired of drowning in Excel sheets, losing money on your inventory, disappointing your customers with delayed orders or having to guess your sales and re-orders? Then your wariness is probably due to the fact that you are lacking adequate inventory management.
Your inventory management is the captain that ensures that your purchases, sales and deliveries automatically play to the same tune. When they are firing on all cylinders, your customers will be purring like newborn kittens, your economy will explode and your manual workload will evaporate.
If you continue to perceive your inventory management as some second-string player in your business, minor headaches in your workflow will turn into catastrophes. And that will hurt the revenue, amount of time wasted and customer experience of your business.
However, the good news is that you can do something about that today!
Just read our 7 tips that will make your inventory management go from headache to happiness. Once you have put your reading glasses back on the mantelpiece, you can go and gather all your most valuable data in one place, make smart purchases and get your sales rocking as you will be ready to automatize your inventory management.
1. Gather All Your Data, Invoices and Inventory Reports in One Place
Sometimes you may feel like you’re caught in a whirlwind of confusing inventory processes, product flows and numbers when you are running a business with physical products. To weather the storm, you should throw yourself the life jacket that consists of gathering all your data on your inventory reports, order flows, deliveries and invoices in one place.
When you systematize your key figures and most important information and park them at the same address, you will be able to:
Get a Clear Overview of Your Bestsellers:
When you have your finger on the pulse in terms of being aware of what products your customers are the fondest of, as well as in what exact quantities, you’ll know what and when to stock up your inventory. That’s the only way for you to plan your re-orders accurately.
Avoid Tying Your Stock Up:
You will be able to point out the products that underperform in terms of sales and just take up space in your warehouse. When you make your purchases based on concrete data, you will never have to empty out your stock without compensation from a happy customer.
Keep an Eye on Your Delivery Costs:
The money you spend on suppliers and delivery can vary a great deal. It depends on how many, and which, suppliers and delivery services you are in business with. And, of course, those God-forsaken energy prices too. When you have the newest purchasing reports available, you can always keep track of your delivery and supplier costs. Thus, you won’t be caught by surprise financially in this department. And you can always change your supplier if they suddenly slack on the service or become too expensive.
Secure All the Components for Your Production:
Depending on what type of products you’re selling, you may have a lot of components in circulation. This goes for production companies, especially. You can easily lose sight of your crucial components, both inside your warehouse and on their way to your site. And then that little girl won’t get her coveted doll house on her birthday, which will hurt her and your business. Consequently: Keep track of ALL your components, large and small.
Find Your Products Fast:
You may be blessed with many warehouses, aisles and shelves. Thus, when you systematize your products and their locations, your workflow won’t resemble a treasure hunt where you’ll need coordinates, a compass and great composure when you’re looking for a specific product.
Keep Track of All Your Expenses and Income:
If you don’t keep accurate stats on your income, expenses and economic losses, your company boat will always be sailing in treacherous waters. In these uncertain economic times, it is even more important to have all your numbers, forecasts and reports readily available in the same spot. Changing prices and sudden expenses will be easier to deal with once you systematize your data.
The moral of this first tip is thus: You optimize your inventory management once you gather and keep track of your expenses, income and sales forecasts. And in doing so, your growth, customer satisfaction and competitive position will increase.
At the same time, with accurate reports by your side, you will never hear that horrendous song with the chorus that goes “Did we forget to stock up on that item again?” in your offices. You kill that noise most efficiently with an inventory management system, though.
2. Automatize and Arrange Your Reorders with an Inventory Management System
Nothing’s more terrifying than the following scene: you see your webshop booming with sales, so you walk with a bop in your step down the staircase leading to your warehouse, while you whistle Queen’s We Are The Champions, only to find out that the shelf with the products is empty.
Cue the music from Psycho.
The best way to avoid this creepy horror sequence is to acquire an inventory management system since it will provide you with the real-time status of your inventory. Thus, you will have ample time to re-order and fill up your stock.
If you set a minimum stock level in your inventory management system, you will receive a message reminding you to re-up a specific product. By doing so, you won’t have to cut the happy tunes when you walk around your warehouse and your customers won’t have to look elsewhere in the future because your service is a horror show.
Another thing: if you’re selling products that perform well during specific seasons, such as clothes, an inventory management system will suit your needs when you have to order an adequate amount of wool, cotton and polyester for your seasonal sales. You’ll also be able to differentiate your products on sale into groups and adjust their prices accordingly.
Yet, don’t burn out your credit card by hitting the re-order button as if your life depended on it. It’s all about reaching the sweet spot in the middle between making sure that you always satisfy the demands of your customers while not upsetting your accountant. Because you need to walk the tightrope consisting of providing the fastest service AND not being stuck with too high an inventory value.
3. Evade Empty Pockets and Overloaded Stocks
It is crucial that you avert tying up too much value to your stock as you will bleed money and space if you are drowning in products that you are unable to sell.
Yet, it is rather difficult to find the optimal stock value that keeps your salespeople and accountants happy at the same time. The salespeople often pull at one end of the rope, making sure that they have plenty of products to sell, whereas the Yodas handling your accounts will pull at the other end as they look to minimize the inventory and purchasing costs.
However, barring sudden problems with your suppliers, as many experienced during COVID, or a frontal collision with raging inflation, you can base your purchasing policy on an inventory calculation that follows the normal distribution of your sales.
By doing so, you don’t have to make your purchases according to the feeling in your stomach, when you calculate the normal distribution of your revenue and find your minimum stock quantity. The formula for finding your minimum stock quantity which will meet the average demand of your customs looks like this:
Since all products don’t follow the normal distribution curve, you could say, as a rule, that all items that are grossing for 20 weeks or more during the year can be used in your new formula.
One final thought for this tip: Do remember to make the calculation of your minimum stock quantity a habit. So, pick up your brand-new formula from your school bag at least once every quarter.
Before you dust off your calculator, you should bring another pro tip along with you which will improve your inventory processes: Remember to adjust your inventory and stock in a proper and timely fashion.
4. Adjust Your Inventory Immediately
If you run into disparities between your actual inventory count and your booked inventory count, this divergence could be due to the lack of adjustments made to your inventory. In order to keep a clear picture of your stock count, and thus your bookkeeping and inventory too, it is crucial that you register all the activities that affect the quantity of your inventory. Here’s a little checklist to help you with that:
- Every time you sell an item, remember to remove it from the inventory. You should also note the expenses from your purchase and the revenue from the sale.
- Register all the losses on your products. Your accounts and the set quantity for your re-orders need adjustments when you have fewer products in stock than expected. This is often neglected on busy and bustling business days.
- If the value of your products depreciates, you need to register it. The reason for the change in the product value could be due to fluctuations within the market – this could be caused by COVID, inflation, customer behavior, etc.
With these reminders in your brain pocket, you will never stumble across an empty warehouse or angry accountants in the halls because you haven’t done your inventory adjustments. Be mindful of those annoying calculation and keyboard mistakes that often happen in systems like Excel, though. Especially when you are surrounded by coffee, cake and chaos in the office.
5. Don’t Bet Everything on Excel or Your Math Teacher
You are probably all too familiar with the unfortunate act. You misplaced your finger on the keyboard and hit the wrong key, put a number into the wrong column or overlooked some minor, yet important, figures.
Small mistakes like these can turn into great catastrophes if your booked inventory value doesn’t correspond to your actual inventory value. So, even though Excel and you, with your fine math skills, might be a power couple, you guys will never reach the status of divine infallibility.
Fortunately, god isn’t the only one that fits the bill.
An inventory management system will always give you the correct figures as it automatically registers your sales from the webshop & POS, your purchases from your suppliers and your stock count.
Thus, the inventory system will shield you from having to register your numbers manually in Excel – which lessens the risk of your committing math and keyboard crimes. And if you pick a cloud-based inventory management system, you won’t have to fear losing all your valuable data and information should your computer cease to live.
6. Get a Digital Backup on Your Product Data
If your computer starts walking toward the light and checks out on you, it might be difficult to save all of your data from leaving as well. You could lose all your sales forecasts when you have to update your system. But – there is a life savior for you out there called a cloud-based inventory management system that will keep your data safe and warm.
A cloud-based inventory system will keep all of your data safely in the digital sky, so you won’t have to attempt to resuscitate all your key figures and information. You will thereby alleviate a lot of human faults when you digitalize your inventory management. Another thing a cloud-based inventory system gives you is a strong leash on your order flows.
7. Float With Your Order Flows and Products in Circulation
You can easily lose touch with all the orders and products that your business has swimming in the ocean. If you want to keep a leash on all the assets floating between your warehouse, customers and suppliers, you must make sure that you can track all your orders and products.
The way to do that is, first and foremost, by gathering all the available product information that you have – for example, the SKU numbers, barcode date and batch numbers.
Batch and serial numbers are especially important to keep track of if you are purchasing a lot of components for your finished products – i.e. if you run a production business. Let’s say that you are in dire need of some component from Japan, but the delivery dates have been postponed, then you won’t be able to deliver the order to your customer on time. That’s one very disappointed customer right there.
However, you can avoid this sad situation if you keep track of your product numbers as it will allow you to assess information on the delay and order the same component from another supplier.
That’s why it is wise for you to keep track of your product and order numbers. Yet, it would be even wiser if you simultaneously got your hands on a cloud-based inventory management system. It will namely provide you with updates on your entire order flow in real-time on the same platform.
And you will thereby never lose sight of the most important part of your business, i.e. your product, since you will float along with your order flow.
Are You Ready to Try an Inventory Management System?
Hopefully, by now, you feel adequately informed regarding what good inventory management consists of. You also should be certain that a cloud-based inventory management system is a means of reaching more revenue, efficient workflows and satisfied customers for your business.
You will get all of that, and much more, with Rackbeat’s inventory management software. It is crafted by the best developers with guidance from the most experienced supply chain managers and our very ambitious customers with whom we are always in close dialogue so we can create the best features possible.
Rackbeat can also fulfill most needs. Thus, if you are on the lookout for some specific functions such as production management, order management or the integration of your webshop with your inventory and economic systems, etc., then Rackbeat is a must-have for you.
You can read more about the costs of an inventory management system in our blog, so you are completely certain of the hidden expenses of an IMS and what you could lose if you don’t purchase one.
If you are tired of reading, you could also test drive Rackbeat free of charge – for the span of 14 days when you create a free account. You can also book a free presentation of Rackbeat with one of our skilled experts if you like. The world of successful inventory management is yours.