Do you have little control over your inventory, spend a lot of time on stock administration, and spend a lot on purchasing and storage costs? Good inventory management puts an end to this. By applying effective inventory management to your store, you keep your products flowing at the best level. This way, you know what the right stock is, at the right time and where it is located in the warehouse, saving you time and energy by purchasing in a more targeted manner. Keep on reading to find out what inventory management is, its benefits, and how to get started.
What is inventory management?
Inventory management stands for the incoming and outgoing flow of goods of your products. This means at any given time, you know what product groups you have and how much of these you have in stock.
With ineffective stock management, you have a less up-to-date data overview. This makes it harder for you to determine what and how much needs to be ordered, leading to unnecessary stock, which will also increase costs. In addition, you do not want to disappoint customers when products in your warehouse are sold out. Effective stock management ensures that you can form a good picture of what products are in stock. Data insight allows you to better determine what you need to buy at any moment, allowing you to know how many products should be in stock so that you can order on time. By purchasing in a targeted manner, you keep both purchasing and inventory costs low and are able to invest more on important things.
What are the consequences of ineffective inventory management?
Ineffective inventory management is mainly caused by the lack of the right data. This has the following consequences:
Spend more time on administration
One consequence of ineffective inventory management is that you have more product administration. You spend more time mapping products. For example, it takes longer to estimate what products and how much you want to order. It also becomes more difficult to estimate when a product will be back in stock.
Less flexibility towards customers
Another consequence of ineffective stock management is that you are less quick and flexible towards customers. The purchasing, stock and sales process runs less smoothly because you do not have accurate insight into your stock, which makes it difficult to set the right priorities for each department. With the right data, you can better organize and manage business processes.
The lack of good data makes it more challenging to determine the right amount of stock. With ineffective stock management, you run the risk of purchasing either too much or too little stock. Overstock leads to high purchasing and inventory costs, but too little stock means disappointing customers when a product sells out. In both cases, you incur costs that are less likely to be recouped.
Do you want to read more tips for smart inventory management? Download the free white paper.
Getting started with effective inventory management
Inventory management consists of constant planning. The goal is to meet customer demand as much as possible. With a few steps, you can start improving your inventory management.
Step 1. Determine the right market demand
Listening to customers allows you to determine which products are more popular than others. This allows you to predict what the market demand is at different times. Market demands can be different every period and are often influenced by trends and seasons. Once you know what the market demand is, you know what products you can buy. Using data-driven forecasting, you can make choices that respond to these trends and seasons.
Step 2. Prioritize and reduce high costs
By understanding what customers want, you can better determine what your runners and soft runners are. This allows you to set rules and/or conditions for the minimum product number to be kept in stock. It’s more convenient to determine the correct safety stock for products that sell quickly. Prioritizing ensures that you incur less costs on stock and storage.
Step 3. Determine the right suppliers
As soon as you know what your customers are asking for, you know what and how much you want to order from a supplier. Inventory management ensures better supplier management, because you can properly map out suppliers.This allows you to determine the time frame that suppliers deliver within based on market demand. The delivery reliability of batches ensures that products are present in your warehouse at the right time.
Step 4. Periodically draw up a balance
Continue to periodically verify that product records match your actual inventory. This will let you know if your stock has suffered a loss and if so, what you can do to prevent this as much as possible. In addition to loss, you can also check to what extent your inventory method is accurate, or whether another method may be more helpful.
Discover the benefits of inventory management
Effective inventory management ensures that business processes are better aligned. You can take advantage of the following benefits:
Benefit 1. Collaboration is enhanced by processes
Inventory management ensures that the sales department can switch quickly with the warehouse to check whether a certain product is in stock. In addition to good cooperation, stock management also ensures that processes are easily optimised, making it possible to automate order advice.
Benefit 2. Respond quickly to undesirable situations
Another advantage of stock management is responding more quickly to obsolete stock. By balancing, you know what your loss costs are so you can determine how you can keep them low. This also gives you the opportunity to better manage profit margins. It is important to find a good balance between the right products and suppliers, while also determining promotions on products.
Benefit 3. Investment in time and costs remain low
When setting priorities, you ensure that costs remain low. You have more money left over that you can use to invest in other things. In addition to saving costs, you also save more time. This way you can focus on other things that are also important.
The advantages of inventory management ensure that you can meet as many customer questions as possible. You determine what is needed in the chain of a product to create a good flow of goods. In addition, effective inventory management ensures more targeted purchasing so that you have fewer purchasing and inventory costs. With Optiply, it is possible to use data-driven forecasting. Based on the purchasing algorithm, Optiply calculates advice that takes into account historical data, trends, seasons, capriciousness and similar information. Want to read more tips for smart inventory management? Download the white paper below and rebalance your stock.