Monday 19 October 2020
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Inventory Management Practices That Will Save Your Business Money

Inventory is one of those dreaded words that means you’re going to be doing a lot of counting. Keeping track of all the products that you have on hand is necessary so that you can reconcile your accounting sheets. A good inventory management system will allow you to avoid having dead stock, spoilage, and pay a fortune in warehouse storage fees. Constructing an inventory management system that works great for your company is going to take some key consistent practices. 

The basis of any effective inventory management strategy is to have par levels set for each one of your products. A par level is simply the minimum number of stock you should have on hand for each product that you sell. Determining the right par level for each product is going to require some decision-making and research that should be continually updated over time. The par level of each product will serve as the indicator of when you need to order-in new products to replenish your on-hand inventory. If your par level is accurate, you should be running out of stock right when you get your fresh delivery of new products. 

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Keeping an eye on what inventory gets send out to the shelves first is the next practice that should be implemented. A commonly known system is the first-in-first-out program. This simply means that your oldest inventory should be sold first. The newest inventory to arrive should be put at the back of the line. This process will help to avoid spoilage, deadstock due to obsolete labeling, and deterioration of structural integrity of storage boxes. 

Relying on an inventory management program is what most business owners tend to do. These programs can be extremely helpful by allowing you to know what you have in stock, order new product when you hit par levels, and can provide you with detailed reporting that can help you forecast future sales. You can check my source to see examples of how an inventory management program can help any type of business that sells products. 

From time to time, it’s important that you double check the inventory management system record with what you physically see in the stock. Some business owners will call for a mandatory inventory once every year where all employees are put on hand to count out the products. Other businesses rely on spot counting, where they check the amount of a random product against what the inventory software says is in stock. Spot checking is done at various intervals, such as every month or every quarter. Both of these techniques are utilized to ensure that the number of specific products physically counted matches the number of products showing in stock on the inventory management system. 

Inventory should be one of the top priorities of any good business owner. This flow of products is what makes the business profitable or broke. By instituting specific inventory management practices into a larger management strategy, you can be assured that your inventory always matches the books.