Inventory management is a subsidiary of supply chain and involves the control of stock and inventory. Some of its aspects are, storing inventory, control and monitoring the ordering inventory, and the control of the number of products to be sold. With the management, users get the right inventory at the right place, at the right time and at appropriate rates. Below, we highlight some of the tricks to learn more while implementing inventory management, to ascertain perfect results.
- Calculating The Right Amount To Stock The Inventory
It is vital to stock the right amount of inventory. If your order is insufficient, clients will automatically leave. On the flipside, when you order is excess, you will be overwhelmed by the extra stock and forced to sell it at a through away rate. According to a research by GetApp, aimed at determining the criteria used by business owners to reorder inventories, 46% of them decided based in previous months information. If you are among the 46%, then you need a system that automatically tracks your inventory management to ensure accuracy, hence the need for an inventory management system.
- Determining The Right Price For An Inventory
Every business person wants to maximize on profits. Most suppliers have enticing deals like quantity breaks. They ask you to increase purchase by 20% and you save about 10%, hence increasing their profit and compromising your expenditure. But is the choice appropriate for your business? What most people forget is that buying the stock is the first step. Other costs like carrying stock, storage space follow, not forgetting that excess purchase can lead to losses.
To ease the inventory accounting and maximize profits, you need to apply the Economic Order Quantity formula. This formula helps you to calculate the units your business needs to add to the inventory order, hence reducing the costs of inventory management.
- Identifying The Reorder Points For New Inventory
Once you identify the EOQ, you only understand the inventory level you should maintain, but another task of knowing when to place a new order awaits. It is a no brainer that your shipment should arrive concurrently with the clearance of your previous stock. An early arrival calls for extra storage hence increasing rates, while late arrival will affect your business.
Even though technology has introduced opening backorders status on most inventory systems, clients can at times leave to seek their products faster. So to make sure you have all you stock on time, you need to practice the reorder point calculations for easy inventory accounting. With the calculation, you need to consider:
- The time taken to pick your items.
- The time taken to pack them.
- The time taken to ship your items.
Then evaluate to determine the reorder point, hence easing inventory management.
- The Perfect Place To Sell The Inventory
If you have multiple selling channels, ensuring you have the right products at the right time becomes a challenge, hence the need to identify a particular selling point. Nowadays, E commerce has become very popular making online stores the best option. However, the stock that reflects on your store should accurately match what you have in your ware house to avoid delays and build your brand.
With the above tricks, distributors who rely on inventory management can rest assured of optimum profitability.