If you’re staying on top of your inventory, you’ll be able to make more sales and ship goods to customers more efficiently. Follow our list of inventory tips to ensure your business thrives all year round.
Plan ahead
With the end of year rush fast approaching there has never been a better time to evaluate your inventory levels. You’ll need to do some forward planning to ensure you have enough products for festive season shoppers. You may want to consider factors such as:
- How many customers do you expect to serve during December/January?
- Do you have enough stock to satisfy these customers?
- How quickly/easily can you get extra stock if you run out?
- How long will the stock last for?
Achieving a balance between under/overstocking can be tricky. Try pre-selling to customers or negotiating with your supplier for bulk discounts to hedge your bets.
Get products 'just in time'
A 'just in time' - or JIT - system automatically orders more stock when inventory reaches a certain level. The JIT system was invented by Toyota as a means of ensuring they always had the right amount of car parts available. JIT systems work best in conjunction with a smart labelling system to ensure your inventory details are accurate. A JIT system can be fantastic for small businesses with large stock turnovers, like fresh food industries or retailers.
However, just because you have implemented a JIT system, doesn't mean you can ‘set and forget’. You will still need to monitor your stock levels to make sure they reflect the demands of your business throughout the year.
Product life
Most products have a certain lifespan. For example, coffee beans are best consumed within 4 weeks of roasting. This is referred to as ‘normal spoilage’. In other words, it’s a measure of the time it takes for a product to become 'spoiled' and unusable. Understanding the lifespan of your products will help you plan how much stock you need and when you need to use it by. However, it’s near impossible to have zero spoilage, which is why businesses have 'warehouse clearances' and 'end of season sales.'
If you notice that some of your stock is getting close to expiry, consider selling it at a discount or finding a way to use it up.
Organisation
A big part of inventory management is efficient organisation.
Organisation starts with your physical space: how much do you have? How is it laid out? How will you get stock in and out? Consider the importance of each stock item and the flow of people in and out. Put your most used stock where it is easily accessible and viewable.
Think about the optimum environment for your stock. For example, does your stock need to be kept cold and dry? Maintenance of such a facility is critical, as cold rooms can attract mould and mildew if not properly cared for and fixing it down the track can be more expensive than regular upkeep.
For some fantastic inspiration for clever inventory management, consider the example of Amazon.com. Amazon delivers millions of orders every day to all corners of the earth – all within strict deadlines. Amazon pioneered a system where stock is grouped according to its popularity, rather than type. This allows the most commonly sold products to be found speedily.
Summary
Smart inventory management is crucial for small businesses. After all, if you have nothing to sell you can't turn a profit. Be sure to plan your stock needs well in advance so that you can maximise your sales and efficiency.
Do you need money for inventory? Or are you worried you will be left short during the end of year rush? Valiant has quick and easy business finance options for you to explore. Give us a call on 1300 780 568 to speak to an expert about your options – we'd love to chat and help where we can.
Nat is the Communications Manager at Valiant Finance. She has a double degree in Journalism and Law, and a background in the fintech space, hailing from Asia's largest fintech hub, Stone & Chalk.
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