Inventory management is one of the key driving forces behind a successful business, and makes all the difference.
Inventory is valuable to a business only once it turns into a sale, so excess stock can be damaging to the bottom line.
Managing your store’s inventory should be a priority, from making sure the older stock is moving to ensuring that you don’t run out of the stuff that’s in demand.
Silverman Consulting and Retail Services are professionals in the field of inventory management, and as business liquidation consultants we help businesses with turning inventory into cash and store closing sales events.
But of course, you don’t need to be closing your store or running a retirement sales event in order to better manage your inventory.
Ask yourself whether you’re doing everything you can in the area of inventory management to maximize the potential of your business.
Why Is Inventory Management Important?
A well functioning business has the right stock in the right place at the right time, saving you money and maximizing profits.
Finding the perfect balance between meeting customer demands and the cost of in stock inventory is not always easy.
Do you have products available when they are needed, or are you losing out on sales because items are going out of stock?
Are you holding a lot of inventory in products that are no longer moving?
Whether you use an inventory management software or have dedicated people to manage your stock, inventory management can be a complicated process.
Inventory Management Tips
When done correctly, inventory management brings maximum profits with minimum in stock inventory.
Sounds easy, right?
There may be more to it than you think.
Let’s take a look at some of the essentials of effective inventory management.
1. First In, First Out
Taking the first in, first out, or FIFO, approach keeps your stock fresh and moving.
This is particularly important for perishable goods and with items that change models every season or year.
For example, if you sell food items then you must know your expiry dates.
If you sell appliances, you know you won’t get the same margins for last year’s model.
If you sell clothing, you likely will not sell many winter coats in July.
If you sell jewellery, it may have a long shelf life but styles change.
As well, most pieces are made up of commodities like gold and diamonds.
These have fluid prices that you need to watch, update, and keep the product clean and polished to entice customers.
Keeping your inventory turning means replenishing with fresh stock and selling aged inventory sooner rather than later.
2. Learn From Your Low Volume Stock
An efficient inventory system will be able to tell you which products are moving the slowest.
Regular analysis of this data will help you to determine whether it’s time to stop carrying items that are not selling, or whether it’s time to discount items that have been taking up valuable space where you could have faster moving products.
Excess stock wastes money, so be sure to keep track of items that are not moving and strategize ways to get that stock out the door.
If you rotate seasonal goods to backstock or the storage room, you must realize that that space is a cost to you.
If you can reduce the size of your back room and pay less rent or have more sales floor space to sell more goods; that is part of inventory management
Give a boost to your back stock by running promotions, purchase with purchase incentives, remerchandising, liquidating inventory, or running an end of season sale.
3. Keep Tracking Your Stock
Inventory management is about numbers, so having a good system in place to track your stock will be of huge benefit.
Give priority to higher ticket items.
Be sure to keep top sellers in stock at all times and plan regular reorder times with your vendors.
Also, with some products, some vendors may offer consignment.
This gives you saleable product while not tying up dollars in inventory.
If this is an option look to buy the faster turning inventory and have slower moving inventory or new untested items consigned.
If you have many different inventory items and vendors, it may be a good idea to use an inventory management software, or to hire an employee dedicated to tracking stock levels.
It is worth the investment to dedicate time and money to managing the flow of your inventory, so you don’t reduce cash flow with excess inventory and that you don’t disappoint customers without of stock items.
It’s a fine balancing act, and if you can get to just in time inventory you will maximise cash flow and can reduce in stock inventory levels.
4. Precisely Project Your Sales
An added bonus of using software to manage inventory is that you can run accurate, real time reports that give you the data you need to project future sales.
Use historical data, market trends, and future marketing plans to help you predict the demand as you forecast sales for upcoming seasons.
As you add new products to your inventory, use similar items and sales trends to determine demand and anticipate required stock levels.
Spending the time to find the right people and systems to help you achieve an optimal system is money well spent because if you don’t do it right, you won’t get the data you need to help manage your business.
5. Don’t Forget, You Still Need To Occasionally Count Your Inventory
Tracking your inventory levels is one thing, but keeping your count accurate is essential.
Most stores perform at least an annual inventory to audit stock.
In addition to this, it’s a good idea to perform spot checks, particularly on the high demand or higher priced items.
Regular inventory or spot checks can also help you monitor shrinkage (theft).
If you find a problem you can take additional measures and should likely increase spot checks to address this.
6. Monitor Your Equipment, Too
Keeping tabs on the equipment you use to run your business is another element of inventory management.
Perform regular inspections on the equipment that you depend on, so that if something stops working you have a plan to replace it.
It could be something as simple as having an extra printer cartridge on hand, or having a replacement plan set up for computers that are becoming obsolete.
Plan ahead and you will not lose any business due to unnecessary surprises.
7. Monitor Your Product Quality
As inventory comes and goes, dedicate some time to inspections.
If you move your inventory around, be sure to inspect it regularly to monitor inventory quality, cleanliness, and saleability.
Doing spot checks of the items sitting in inventory will ensure that your products look great for your customers, just like inspecting items as they arrive will keep damaged items from entering your inventory.
Contact Silverman Consulting & Retail Services
Whether you are expanding your business with new location, or you are looking to downsize or looking for an exit strategy, Silverman Consulting & Retail Services can help you manage.
Our experienced retail store consultants can show you how to find efficiency and maximize the potential of your inventory.
Contact us today to find out how to turn your stock into cash
Contact Silverman Consulting & Retail Services today.
Silverman Consulting & Retail Services229 Yonge St suite 400,
Toronto, ON M5B 1N9, Canada
1 (888) 955-1069