Inventory and stock control is one of the toughest challenges you’ll continue to face over the lifetime of your business. You have to judge what your customers want, how much they need and when they need it – all without you having significant excess stock, and avoiding overselling.
Here are 5 tips to help you control your inventory and manage stock levels.
There are several efficient ways to control the stock you need and when to order it. You can either identify your minimum stock level and re-order when you reach that threshold; or you can choose to regularly review your stock and replenish or return goods at every review.
The ‘just in time’ method can reduce costs by keeping stock to a minimum and only delivering when products are needed. However, you need to have a reliable supplier you can trust to deliver promptly. Additionally, you can be caught off-guard by an increase in demand and run out of stock or even oversell.
Do your best to know what needs restocking and what doesn’t, at every warehouse location. This enables you to hone in on dead stock and increase operational efficiency.
Monitor velocity and consider having a lower volume of big-ticket items in your inventory at any one time, as these are perhaps less likely to sell quickly and therefore have an impact on your cash flow.
It makes sense to keep more stock of items with a higher sales velocity to avoid disruption and improve turnover. The longer an item sits in your warehouse without selling, the less margin you’re making when it eventually does sell.
That brings us neatly onto liquidation. Product sourcing is tricky to get right, and every business has struggled to get rid of a product at some point.
The goal of inventory liquidation is to get rid of any of that unwanted or dead stock at the best price/least expense. Think about which promotions you could run to shift products fast – time is money when it comes to holding inventory that doesn’t sell.
That means it’s better to sell at a slight loss than tie up warehouse space with stock that never moves. The influx of sales associated with liquidating inventory can also be a good source of feedback and seller ratings, particularly on marketplaces where these factors are crucial to keeping momentum going.
The same still applies for businesses selling on webstores – try to incentivise buyers to leave reviews, and entice them back with email marketing.
Don’t make the mistake of organising your warehouse by product lines as this will actually increase the cost of filling orders thanks to higher picking time.
The best way to utilise locations is to position your fastest selling items closest to the shipping, staging and receiving area of the warehouse to keep most of the picking activity in one small space.
Automation helps to reduce human error and improve productivity. Look for a solution which allows you to control your inventory, both physical and virtual, across sales channels. It should enable you to automate your SKU management – the best solutions do not have an upper limit to the number of variations and master SKUs they support.
Inventory management automation can significantly reduce the risk of overselling by setting minimum stock thresholds, which trigger stock replenishment.