Inventory management can be defined as a group of tools, techniques and approaches that helps you to store, track, deliver and order inventory. In most cases, a huge amount of the company’s working capital is wrapped in the inventory and for this reason. Therefore, inventory management is an essential tool for any developing company.
Inventory management is known to be a customizable part of running a business, and the optimal system varies from one company to another. Nevertheless, each business must strive to get rid of human mistakes from inventory management by using inventory management software. Irrespective of the system you choose, these techniques will assist you when it comes to improving your inventory management and cash flow.
Make sure you set par levels
Setting par levels for every product plays a vital role in making inventory management easier. A par level refers to the minimum amount of product that is available every time, and the moment your inventory stock reaches below the predetermined levels.
Even though it needs some research and decision making before you set the par levels, this technique helps in systemizing the process of ordering. Apart from helping you make a decision fast, it will also let your workers make informed decisions on your behalf.
Use the First-In-First-Out (FIFO) principle
FIFO is one of the essential principles that you must implement in your inventory management. This implies that your old stock which is first in will be sold first before your newest stock. Note that this is vital for perishable goods since it prevents you from having unsellable products due to spoilage.
For you to effectively manage a FIFO system you must have an organized warehouse and this includes make you add new goods from the back, or ensuring old goods are always at the front. However, in case you have outsourced the storage services to a warehousing firm, they will do this for you but make sure you contact them to confirm.
Create a relationship with suppliers
Successful inventory management involves having the capability to adapt quickly. Irrespective of what you need, such as returning a slow-selling product to create a room for new goods, restocking a quick selling product quickly, troubleshooting manufacturing problems or expanding your storage room, it is also vital to create a good relationship with your suppliers. This way, they’ll be happier and willing to stand by your side whenever you are experiencing some problems.
Creating a good relationship with your suppliers is important to the growth of your business since you can negotiate for minimum order quantities. Try to ask for the lower minimum to avoid carrying a huge inventory.