Best Practices for Effective Inventory Management

Best Practices for Effective Inventory Management

Inventory management is not the most exciting retail topic but it is crucial for all business. It can make or break your bottom line. By having too little inventory on hand, you risk losing customers as products quickly sell out. However, having too much inventory ties up valuable cashflow and costs more to store and track. Effective inventory management sits between these two extremes. While it takes more work and planning, your profits will reflect the effort you put in. Thankfully, there are proven best practices for effective inventory management.

 

1: Focus on Your Customers First

When looking at inventory management, it is important to focus on your best customers. They are key to your future success. “Best customers” are those who shop often, spent the most, and already love your products. By keeping them happy, they will keep coming back. It is part of the important 80:20 rule. This rule states that 20% of your customers are responsible for 80% of your profits.

Look at the products these customers are buying. Products that sell well with these dedicated customers are likely to attract new customers. Consider them a representation of market trends – by analysing what your best customers buy will keep you ahead of the pack.

Consistent quality and product categories also helps strengthen your band. The more you can deliver on high quality, recognisable and branded products that appeal to your “best customers”, the better these products will sell.

 

2: Audit and Categorise Your Inventory

It is important to categorise your inventory into priority groups so you know what you need to order more of and how frequently you order. Not all items in your inventory are equally important. ABC analysis is the best way to categorise your inventory. In fact, many industry leading inventory management programs utilise ABC analysis.

Items in your A group are the high ticket items that you generally need fewer on hand. Group C items are lower cost items with quick inventory turn over times. And Group B is everything else, the moderately priced items that sell slower than Group C but faster than Group A. This allows you to analyse and optimise the use of warehouse space.

It also allows you to ensure the most important items are always available. You should be using the most space for items that are in demand, and less space is dedicated to less important stock.

You should audit your inventory weekly or monthly, though some companies do a comprehensive review once a year. No matter how frequently you do it, you should make a point to count your inventory regularly to make sure it matches what you think you have.

 

3: Develop an Effective Inventory Management Plan

After studying, auditing and categorising your products, it is important to develop a proper inventory management plan. This may require the efforts of many departments in your business, including marketing, catalogue, merchandising, sales, and eCommerce. You need to work with these departments to move your Group C products, especially.

Having a management plan also allows you to control costs and preserve your profit. For example, customers don’t want to pay full price for end of season stock, and you don’t want to spend extra money managing and storing slow-selling stock. This is why you need residual inventory management. You can analyse what remains at the end of the season and is being carried into the next season. And you can then put those items on sale, as a result. For example, putting winter knitwear on sale in spring.

You can manage residual stock by creating season codes with style numbers as you add products to your inventory. This makes analysing stock vastly easier.

Establishing inventory KPIs can also help you measure your performance in particular categories over a specific amount of time. This helps eliminate guesswork by giving you clear milestones to hit weekly, quarterly and/or yearly. With the data you create from KPIs, you can make the best strategic decisions for your business.

 

4: Track Your Product Information

It is important to keep good records on your products including SKUs, barcode data, countries of origin, lot numbers, and suppliers. It is also a good idea to track the cost of each item over time so you know what factors may change – like cost, seasonality, and scarcity.

You could, for example, use batch tracking, also known as lot tracking. It is a process for efficiently tracing goods along the distribution chain by utilising batch numbers. Batch refers to a particular set of goods that are produced together and use the same materials. This is helpful to pinpoint any quality issues as they can be quickly isolated to particular batches, should you need to recall.

By having an effective inventory management plan also allows you to track moving inventory. This creates an easy, seamless experience for staff and customers. If one location has sold out of a product, staff can easily find a location with it in stock, request it, and have it sent to the store or customer. Tracking inventory also means you can track products in transfer so you don’t have issues with overselling and fulfillment.

 

5: Consistent Supplier and Restocking Systems

An unreliable supplier or restocking system can make inventory management extremely difficult. Unreliable suppliers cause headaches when it comes to inventory. If you have a particular supplier who is always late with deliveries, or frequently shorts you on stock, you need to take action. Discuss the issues with the supplier in question and find out what the problem is. You may have to choose to switch partners, or continue on with unreliable service.

Consistency in receiving stock and restocking is also important. You need a standard process that everyone on your team follows to avoid discrepancies. Even the smallest discrepancies can cause issues with restocking and fulfilling orders.

 

6: Inventory Management Technology

There is, of course, more than one way to manage your inventory. This includes vendor-managed inventory, inventory management technology, and cloud-based technology. By utilising these options, you can effectively automate your inventory management processes, making it easier to maintain accurate inventory counts. Automating your process means you can leave the paper process behind, and utilise a simple handheld device to manage stock. Leveraging software and inventory management software you can gather better data on product sales and popularity.

While many small businesses can easily manage their inventory manually, using notebooks and spreadsheets, as your business grows this is no longer viable. You end up spending more time on managing inventory than doing anything else with your business. Effective inventory management technology makes inventory management easier and taking the stress off your shoulders. It is important, though that you choose a software solution that works with what you need, is easy to use, and provides you with the right analytics.

You also need to ensure your chosen software integrates well with your business and processes. Your software should properly communicate with your POS systems, for example, so there are no discrepancies in inventory levels.

If you are wanting to discuss inventory management technology options for your business, click here

How to effectively run a multi-channel business?

How to effectively run a multi-channel business?

During these challenging times with COVID-19, running a multi-channel business is even more important as some of the traditional business channels may be impacted with shutdowns and changed trading conditions.

You are running a multi-channel business if you have multiple sales channels or ways that your customer can buy your product. For example, you may be a wholesaler who has a sales team which visits customers taking orders, but also operates an online store where customers can but direct from you. You may also have a bricks and mortar store and have a point of sale system recording sales.

One of the key challenges with a multi-channel business is being able to keep accurate records and track of your business across all the different channels in your business. This becomes increasing difficult in fast growing businesses when you are trying to maintain multiple disconnected systems.

Having an integrated solution will reduce the amount of data entry which is required to maintain multiple systems as well as giving you a clear idea of how your business is performing across all of the different sales channels.

Some possible solutions include integrating an inventory management solutuon like Unleashed or Vend with your ecommernce platform like Shopify or Magento. If you also operate a bricks and mortar store you can integrate a point of sale solution like Vend. If you sell business to business then adding a B2B portal to assist with your order management may also improve your efficiency. Of course this will also be integrated with your accounting solutiuon either Xero or Quickbooks Online. As you can see there are lots of options, but getting the right set of solutions will greatly assist you taking your business to the next level.

If you want to improve the business software solutions in your business, click here to arrange a FREE initial online consultation

Unleashed Inventory: Enhancements to the Xero Integration

Unleashed Inventory: Enhancements to the Xero Integration

Earlier this month, Unleashed announced some important enhancements to their Xero integration. We have included details of each enhancement and how it may affect you.

Batch your journals for quick reconciling in Xero

Unleashed will now batch all transactions made within the day and post one journal to your Xero account split by accounting code. The journal will be posted at 2.00 AM the following day and will be ready for you when you log on in the morning. This is a really useful enhancement as the journals use to be posted individually at the time the transaction was completed in Unleashed which meant ensuring all the individual journals were approved in Xero so that Unleashed and Xero would reconcile.

Link to a transaction in Xero from Unleashed

With this improvement, you can view a transaction in Unleashed and click through to view the same transaction in Xero. This quick and easy transition makes it a breeze to compare transactions between both platforms. This is another really useful improvement as it replaces having to manually search for a transaction in Xero which was both time consuming and inefficient. Below is a screenshot of how the Xero link will appear in Unleashed

Choose the product information you send to Xero

This improvement allows the user to choose what product information Unleashed sends through to Xero for all transactions. Users can choose between Product Code, Product Name or both. This flexibility allows users to decide what product information their customers and suppliers will see on their documentation. This is another significant improvement as the information sent was not able to be adjusted which led to a manual correction in Xero.

Auto approve specific Unleashed transactions exported to Xero

With the ability to auto approve exports to Xero, you can select the specific types of Unleashed transactions that can be automatically approved. With a quicker impact on your P&L, you’ll gain real-time insight into your bottom line. This has been the most asked query which I am asked by customers as to why I have to approve the transactions in Xero even though they have been completed in Unleashed.

Prominent alerts for journal errors

If there’s an error in exporting journals through to Xero, you’ll now receive a prominent alert so you can quickly take action to ensure your items are sent through to Xero in a timely manner. This is another great enhancement as we often receive support calls from clients well after the error has occurred and this timely and prominent alert will allow for errors to be rectified in a far more timely manner.

Allow Sales Order & Purchase Order comments to be transferred to Xero

Ensure that comments on your sales and purchase documentation are not lost in Xero as you transfer documentation from Unleashed. This allows your customers and suppliers to receive better and more detailed information from you! Once again we get asked by customers if the line comments and sales order comments can be transferred to Xero and now they can.

Overall there are some awesome enhancements to the integration between Unleashed and Xero. If you require any assistance setting up these enhancements in your Unleashed account please do not hesitate to contact us

If you are looking for an inventory management solution for your business, check out Unleashed.

 

Unleashed: Powerful Inventory Management For Total Stock Control

Unleashed: Powerful Inventory Management For Total Stock Control

Are you struggling with inventory control? Are you finding it difficult to manage your supply chain efficiently? Unleashed is a great solution that enables you to manage your inventory and supply chain, all in the cloud.

Unleashed provides real-time information for all your products that can easily be updated across all of your sales and inventory channels. The Unleashed dashboard also allows you to see real-time profitability and sales information. Even more precise stock control can be gained with per warehouse controls. Per warehouse controls allows you to monitor the levels of a product across all warehouses.

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DEAR Systems   Allowing You To Make Informed Inventory Decisions

DEAR Systems Allowing You To Make Informed Inventory Decisions

Businesses all around the world are reaping the benefits of DEAR Systems a revolutionary cloud based inventory system which is easy to use and highly affordable.

At the heart of inventory decisions is profit. DEAR Systems helps businesses increase profits through informed decisions and the ability to track sales from quote to shipment. In DEAR systems, your entire supplier purchasing history is recorded along with correct cost, allowing you to create the right pricing strategy for your products and make informed decisions about stock levels and discounts.

DEAR Systems integrates with many accounting systems such as Xero and Intuit, meaning that you can see who owes you money at the click of a button! What s more, its sophisticated manufacturing module helps you to easily keep track of your costs, so you re never lost. DEAR Systems also allows you to leave the days of manual double entry accounting in the past.

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