Inventory management is often the lifeblood of a product sales company, and yet it is far from easy! Making mistakes in replenishing or managing storage has certainly happened to a lot of SMEs/VSBs. To avoid them as much as possible, you need to set up a good inventory optimization system. To help you out, here are some of the best practices!
Inventory optimization involves strategically adjusting inventory levels according to customer demand, thus avoiding stockouts and surpluses.
The aim is to balance supply and demand as best as possible in order to reduce costs and increase profits.
In case of poor inventory management, the consequences can be disastrous: stock shortages, missed sales, poor brand image, blocked capital due to overstock, product obsolescence in some cases...
As you can see, optimizing storage is essential to avoid the worst, but it also has some advantages:
There are 4 methods of replenishment. You need to choose the one that best suits your business:
The best way not to get confused is to have each of your products labelled in your warehouse. You will have access to essential information about your items, such as the expiration date, the presence of risky materials, preservation and packaging requirements...
Be careful how you name your inventory! Each name must have a very specific meaning. Develop an organization system with categories and subcategories. Each of your employees should understand what the names refer to. This will reduce the margin for error.
The ABC method allows you to categorize storage into three classes based on their value. This process is very simple:
This allows you to optimally evaluate; category A should never be out of stock.
This method, which is very easy to implement, allows you to streamline the management of your stocks and to make better decisions.
Here, we encourage you to do an inventory to diligently check that you are not keeping inventory that is obsolete and will likely never be sold in your warehouse. Much like spring cleaning, you need to decide what's useless and what needs to stay. This inventory will also allow you to very clearly identify new, mature and end-of-life stocks.
As we mentioned, overstocking is the worst enemy of a company selling products. To reduce your costs and optimize your inventory, try to reduce the quantity of items.
This is difficult, we are aware. It's all a question of balanced production and knowing your customers and your products. You need to make sure that your customers always find what they are looking for in store or on your site, without having too much merchandise.
You must set up just-in-time supplies, in order to be able to lower stocks according to your orders.
To do this, you must set up a process for managing orders and delivery times. You can use the storage methods mentioned above and/or use inventory management software. If you haven't digitized your inventory optimization yet, it's time to do it!
How can you maintain good inventory optimization if your teams are not trained in the organization system and best practices? You should definitely invest in training your employees who are in direct contact with inventory, whether they are in the warehouse or behind a computer.
If they fully master your system as well as your storage and automation methods, you will be assured of minimizing human error and maintaining good inventory management. Once trained, do not hesitate to give regular reminders, especially if the organization evolves or orders increase!
Our advice? Limit access to stocks and the warehouse as much as possible. Only employees whose mission is to handle the goods. This will limit disorganization and errors.
If you don't establish a documented inventory process you won't be able to keep track of it for long. All merchandise movements (orders) and important information (faulty products, low stock, etc.) must be recorded accurately and rigorously. The best thing is to scan your inventory and update this document as regularly as possible.
You also need to share this data with your inventory management teams and let them know how to handle it effectively. To do this, there is nothing better than using inventory management software…
Automating the management of your inventory is the key to knowing, in real time, its status and thus optimizing the flow of goods. To ensure that inventory management software perfectly meets the needs of your business, consider Trying it out with a free trial. Several software programs offer this possibility, even if these versions may be limited in terms of features.
Erplain, as a complete Saas solution adapted to the budgets of small businesses and SMEs, meets all of your inventory and cost management needs. It allows you to limit the error rate, to save time, and to anticipate inventory shortages. Your inventory are updated after each order and sale. In addition, to avoid the obsolescence of your inventory, you can track your lot numbers and expiration dates to avoid having obsolete inventory.
Finally, you create detailed data reports to, on the one hand, optimize inventory and improve your cash flow and, on the other hand, value the goods in real time. Ultimately, you maximize your performance and identify the best customers and sales to perfect your business strategy.
Erplain is an intelligent solution to manage your VSB in real time. Try for free !
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