Do you find it difficult to get rid of your dead stock? Are you always wondering how your warehouse can be better organized? Are you spending more on stock storage? There is a good chance that your stock is not in balance. Start by optimising your inventory. This will ensure that your current inventory generates more profit than it incurs unnecessary costs. Optimising stock also ensures that you have better information about your current stock of goods. Not only will you have more balance in your stock, but you will also buy in a more targeted way. This blog explains what optimising inventory exactly means and how to get it in balance.
Back to basics, what does optimising inventory mean?Optimising stock is nothing more than saving costs by gaining insight into current stock management. This starts with mapping the flow of goods. As a webshop owner or wholesaler with a small range, you often know where your products come from, when they go out, what they cost and what a typical order size is. When the assortment of inventory grows, this overview can easily get lost. The goal of stock optimisation is to find a good balance between keeping inventory costs as low as possible and creating maximum turnover.
What if you don’t optimise your inventory?
If you do not optimise your stock in an efficient way, this leads to bottlenecks, such as less overview and more costs. The consequences of postponing inventory optimisations can be found below:
To measure is to know—this also applies to your stock. It is difficult to determine the new ideal stock level without a good view of old sales, stock, and purchase data. This can make it extremely difficult for the purchaser. Your gut feeling often predominates during this process, so you don’t prioritize products that deserve it, resulting in either too few or too many products. This leads to no sales and incurs additional inventory costs.
No efficient workflow
Due to the lack of good stock information and central tools, it takes more time to check facts. Communication problems quickly arise between the sales and product departments. Moreover, this also affects an overcrowded and cluttered warehouse. For warehouse employees, this is less efficient work, which in turn leads to delayed deliveries and low customer satisfaction.
Low customer satisfaction
An unoptimised stock also affects customer satisfaction. When a product runs the risk of being sold out, the chance of selling is greater. Due to the lack of data, you have less insight into what is best to order, which means that you are less flexible towards customers. Balancing your stock ensures that you can respond more quickly to customer questions and thus also increase customer satisfaction.
Incorrectly optimised stock management and a lack of the correct source facilities leads to more administration. When you get data from different tools and datasheets, you can quickly lose the overview. You should also always double check whether certain data information is still correct and accurate, such as the flow of goods, the actual stock value and stock position. Stock optimisation software ensures that you have a good overview of stock, which means less administration for keeping track of information.
These consequences generally involve more energy and time, so if you want to keep a grip on your stock management, it is important to keep stock information in order.
Where in the inventory process is inventory optimisation important?The inventory process consists of five parts: receiving goods, registering goods, storing goods, delivering goods, and inventory inventory. During all these steps, it is important to record and maintain a good product file. This is done by registering products so that you know what goods you have, how much the purchase costs are, what the selling prices are, and so on. For each step, you can see what you can still optimise for a better overview of your entire stock process.
Optimising stock is about information provision
Good information provision ensures that we have a better view of situations. It helps us to better estimate what we need and what we don’t to achieve a goal. This also applies to optimising your stock. If you don’t have the right information about your inventory, you are more likely to make purchasing decisions that result in more costs. Here are a few reasons why inventory optimisation can help:
It keeps costs low
With stock optimisation, you create an efficient overview so that you have less administration. You can provide more overview by using a central tool that combines different data. Inventory optimisation software can help with this. Compared to working with Excelsheets, you have analyzed your stock in no time. Inventory analysis gives you a better idea of your number of SKUs and how your inventory is doing in general. You can use optimisation points to determine which aspects of the inventory process generate money—and which do not.
It increases sales and customer satisfaction
The better the information provision about stock, the better you can respond to market demand. On the basis of data, you can predict how well a product will or will not do. If there is a lot of demand, a product will sell better, so you know that you’ll need to stock up. Responding to market demand and targeted purchasing ensures that you can optimally serve customers with appropriate stock.
You have more competitive advantage
A good provision of information also ensures that you can stay ahead of your competitors. Responding to customer questions and ordering products on time are examples of increasing customer satisfaction. This way, you are better able to encourage repeat purchases. For example, 66% of retailers say that reliability in offering products or (online) reservation is not always in proportion to actual stocks. Accurate stocks keep as much grip as possible on preventing no sales from happening.
You ensure sustainable stock management
Once you have a stock in balance, you ensure more sustainability in the supply chain. You ensure that you do not purchase unnecessarily, so that less production is required. In addition, you also ensure less CO2 emissions. You don’t have to order as often because you know what to buy based on forecasts. For your supply chain, this means less waste in the broadest sense.
Start optimising inventory
You can optimise stock in different ways. Keep on reading for some tips on how to optimise inventory.
Tip 1. Perform an ABC analysis
Gain insight into your runners and soft runners by dividing your products across three categories. By performing an ABC analysis, you know what the turnover rate of products is. This divides products into three categories. The products that sell hard are category A, category B are the products that are sold moderately, and category C are the products that do not sell well. It is possible to perform this analysis in real-time using stock optimisation to always keep up-to-date.
Tip 2. Use inventory optimisation software
Invest in stock optimisation software for bundling old data and following up on purchasing advice. Inventory optimisation software ensures that the inventory and purchasing process is fully automated.
Tip 3. Analyse your suppliers
Efficient inventory management starts with measuring the delivery reliability of suppliers. It can take a lot of time to find which suppliers deliver products on time, so analyze suppliers and decide where the best place to buy is.
The right information for the right purchasing decision
Do you want to save as many costs as possible and achieve more turnover? Start optimising inventory. By creating good information facilities, you are able to make good purchasing decisions. Analyzing data and combining it with purchasing algorithms can go a long way. Optiply offers an automatic solution where you can bundle stock, purchase and supplier information for targeted purchasing.