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Inventory management refers to a part of the supply chain. The prime aim of inventory management is to optimise the inventory based on demand. When effectively done, it can reduce situations of unnecessary expenses involved in maintaining stock such as wastage or excess. Having a clear idea about the best techniques for efficient management is thus essential for any business offering products.
Best inventory management practices for small businesses
Following are some of the inventory management techniques which can help small businesses to manage their stock.
Make accurate forecasts
Accurate forecasting is crucial. The projected sales calculations need to be based on the various factors like the previous sales figures, predicted growth, market trends, economy, marketing efforts and promotions.
Implementing the FIFO approach
FIFO refers to first in first out approach. It means that the items which come in first will be utilised first. It is one of the most commonly put in inventory management techniques for consumable products such as food, flowers, makeup, etc. The businesses can use the same principle for stock control, which the grocery stores use. The new stock stays in the back while the older stocks are emptied first.
Evaluate your stock
For proper inventory management, it is mandatory to check whether the stock level is maintained correctly. Not managed, it can lead to stock deficits or wastage. Different businesses use different techniques along with an annual, year-end physical inventory.
Identifying low turn stock
In case a business has a commodity which hasn’t been sold yet in the last 6 to 12 months, it is better to let them loose.
It is detrimental for a business to sustain stockpiles left unsold over a long period. Selling the excess for promotional prices or discounts before the stock loses its pricing is important for a business to generate at least the cost price of that stock.
Keeping track of the stock levels
It is essential to implement a reliable system in place to track stock levels while prioritising the expensive product. An effective software program saves both time and money by reducing the burden. Following a business owner’s complete guide on inventory management can help you choose the right software.
Reducing equipment repair time
Maintenance of equipment is part and parcel of both your operational budget as well as your production line management. Repairing machinery which is broken for the matter will require both time and money. It is essential for the business to upgrade maintain a buffer with their inventory pre-emptively to avoid hampering consumer-end distribution.
There can be substantial investments involved for proper inventory management. Having sufficient capital at hand is thus essential but not always readily possible. Availing a business loan can help finance any shortcoming in the inventory, from restocking to upgrading.
Leading financial institutions like Bajaj Finserv offer Business Loans with them various attractive facilities such as 24-hour loan disbursal and flexible repayment tenors. Not only that, but the easy-to-meet eligibility criteria and minimal documentation requirements make an application for these loans a hassle-free process.
Poor inventory management can result in unnecessary stock-piling or shortage of it, detrimental for the finances as well as the reputation of an organisation. As a product-oriented business owner, you should know all about inventory management for sustainable growth.