1. Don’t get bogged down with too much inventory
It is common to be afraid of running out of inventory. Completely depleting your stock can lead to loss of sales and customers. But overstocking can use up working capital and diminish profits. Storing excess inventory adds to the expense and can offset volume savings. Once you are in possession of the product, it is exposed to age, damage, expiration and shrinkage. The end result can be selling it off at doscounted rates or simply liquidating the goods.
Solution: Analyze past sales numbers and identify projections. Use this data to dictate ordering and manufacturing timetables. Be sure to keep in mind seasonal or product related sales spikes and account for them accordingly.
2. Increase inventory accuracy
Once you have optimized your ordering or manufacturing it is imperative that you maintain accurate inventory counts. There are a number of inventory transaction types that must be procedurized to eliminate errors. New deliveries, movement of inventory within your warehouse and outbound shipments must be accurately counted and updated in your counts.
Solution: Using an OMS software that allows for bar code scanning can help eliminate data entry errors. Scanning can also be utilized at the pick, pack and ship steps. Physical counts must be performed regularly as counts are susceptible to many errors as well as shrinkage. Establishing cycles for inventory counting can help establish regular routines for physical counts. .
3. Mind the top sellers
In most cases, giving full attention to the management of each and every SKU can require too much manpower. One key is to establish high priority items comprised of all of the biggest sellers in your catalog.
Solution: Generally speakin a small amount of the items you sell and ship represent the majority of the outbound orders. Identify the top selling items and focus more detailed inventory management on those. Take the top 20 percentile of your inventory items and apply more frequest counts to identify re-orders and miscounts early to avoid shortages.
4. Using spreadsheets
Spreadsheets are a fast and inexpensive way to manage inventory. For small operations they can be an effective way to track items. But there are some serious pitfalls that can result. Changes and updates can be easily lost and there is no problem free way to manage multiple users who need to synchronize daily use.
Solution: Using the inventory management modules of common accounting software like Quickbooks or Peachtree may be enough for your business needs. But if you have intricate daily processes such as back orders and movement between multiple locations you will need a much more robust WMS. SaaS inventory management systems would be the best solution for these types of scenarios.
5. Back up the data
Whether you are using spreadsheets or accounting software, you are more than likely hosting the data on your own server. What happens if there is a fire or your system crashes. A solid backup plan will be required to ensure that your data is safe and available.
Solution: This is not rocket science, but you may be surprised how many companies do not have a good back up procedure. Simply saving the data daily to an external drive can save you from the worst case scenario. But using a hosted WMS with redundant back up is the smartest way to go. Leave the integrity of your important data up to experts that have created a safe and secure environment will allow you to sleep better at night.