Inventory can link-up a major portion of your working capital. If inventory is managed properly, business owners can spike their business’ revenue up to greater percentage. Yet, many of them don’t know if they’re managing it effectively. Or, even what products they have in stock. In this article, we provide you the best solutions for inventory management.
The very basic thing is why inventory exists? Inventory comes in place due to lack of congruence between demands and supply of products. It is also related to the uncertainty associated with all this. Monitoring the inventory is the first step to inventory management. Most companies lack this step of saving money. Here are some tips that every entrepreneur should consider for better inventory management.
Proper label and organize
Make your inventory items properly labeled and tagged. This will help you to find them easily when you need it. In addition, labels and tags should have easy to read descriptions. Make sure those units of measure are consistent to avoid chances of error and confusion.
Record your inventory
Create a system to record the current inventory you have. It could be database or a document. Make sure you can update them easily. This system is so crucial because it tells you how much and what inventory items you exactly have. Moreover, it also alerts to order extra inventory items to fulfill client’s demands. If companies consider buying inventory management software, they don’t need to rush for keeping up with orders. And, it will help organize information better.
Review your inventory
A regular count of inventory on regular basis works well to have a consistent view of what’s recorded in system. If your system is showing that you have 4 pieces, but in actual you’ve one. Odds like that can cost you on orders. Thus, counting can help avoid such conflicts, and identify mistakes. Inventory review can be done with cycle count method or physical count. Cycle count is a physical count of small sample of inventory. This method can be done daily or weekly. It makes sure that information on your system is accurate. Physical counting method is somewhat more time consuming method. It physically involves counting each and every item of inventory to find and compare what’s recorded in system.
This method implies annually or on semi-annual basis.
The final way to improve Inventory management and reduced costs is use of various inventory metrics. Such metrics are useful to identify or track problems. It gives you a data to better analyze inventory items and evaluate your progress.
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