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Do you think that managing inventory is like a piece of cake? Since your business keeps booming and there is skyrocketing demand for your products, you will soon find yourself being subject to growing issues. You may not be aware of the fact that there are several companies that have lost billions and even went to the extent of closing their stores due to poor inventory management. For instance, Walmart burnt $3 billion due to its stock issue or even the company called H&M which struggles to unload more than $4 billion in surplus store inventory. Before you move into the details, you need to know what inventory management is.
Inventory management – What is it?
Inventory management is the science and art of dealing with tracking, storing, managing, and ordering inventory from the supplier to the retail outlets. You can start off with the moment you ordered the raw materials till the product is given to the hands of the customers. When there is too much money tied to a business, you’ll require utilizing a plethora of tools to manage the feat. You can this way avert certain logistics and production issues like:
- Soaring storage costs
- Deadstock that is unsellable keeps increasing
- Products that are spoiled or cross the expiration date
- Huge cancellations of order
- Delayed turnover and missed deliveries
In case you wish to avoid all these unnecessary expenses and boost your cash flow, the key is inventory management.
1. Track your Demand and Supply Balance in Real-time
It is vital to keep an updated stock level and have real-time records of each item. This includes checking the locations of the product. When you can manage the inventory in real-time, you can manage the availability of the present stock and customer demand so that you can avoid backlash from customers and other fulfillment issues.
2. Have Buffer Stock Available
Even though you track orders accurately, you will still come across issues in fulfilling the sales orders of the customers when the demand for the product increases due to unpredicted demand. When you have a safety or buffer stock, it lets you sell the best products like hotcakes during periods of delays in production and raw material issues. One of the best ways is to seek the benefit of automated inventory alerts.
3. Have a Plan B for Emergencies
The secret to perfect inventory management is to plan for emergency situations and keeping an open mind for when changes may occur. There will arise situations when the demand will surpass the supply on hand and sales will spike naturally. Seasonal demand will trigger the requirement for bigger space for storing goods. You should have all sorts of plans ready for emergencies.
When you’re wondering about the ways in which you can manage your stock inventory, you can take into account the above-mentioned strategies and techniques.