Maintaining a sufficient inventory is critical for the health of your company. You will not be able to fulfill orders and keep your customers satisfied if you don’t have enough products to sell to them or your items are continuously back ordered or otherwise unavailable.
It can prove difficult to project just how much inventory you will need for your business in a given time and you may buy too much or too little. For instance, if you are expecting increased holiday sales you may order too much of one item only for it not to sell as well as you expected. You may be forced to sell the items at a discount just to get rid of them.
One way to correctly project your company’s need for a specific product is to keep excellent records. Analyzing the records of how much of a product sold over a specified period can help you predict future sales. You should also take into consideration the season of the year. Does the product sell better in the winter than it does in the summer? Pay attention to such trends, and you will be able to become better at projecting and maintaining your inventory.
You should also check your records often for any inaccuracies that could throw off your inventory projection amount. If mathematical mistakes are made, and purchases of a product by customers are not recorded correctly, you will not be able to make the correct projection. Using software can help keep count of inventory, but the information must be entered correctly for the generated reports to be accurate.
You can choose a couple of your company’s products at regular intervals and compare the amount you actually have in stock with the amount listed by the inventory software. How often is the count accurate? How often is it inaccurate? If you are encountering too many inaccuracies, you will need to rework your system of keeping count of inventory. You may want to seek the advice of a professional to help you implement improvements.
To start improving your inventory system, you should start with your best-selling products first. Make sure your count of these items are correct at all times, and there is always enough stock on hand for the customer’s orders.
Holding on to stock or stockpiling it can create some problems. Sure, you want to have enough on hand to meet the demands of customers, but you don’t want too much. Too much inventory represents monetary waste as a product sits and gathers dust. If you buy in bulk to save money, you may incur more costs in storage or the product may go out of favor with the public too quickly. However, on the other hand, too little inventory may cause a shortage and a loss of customers and profit.
If you have suppliers that are very dependable, then it may be a good idea not to carry so much inventory. Too much stock makes it harder to keep an accurate inventory count.
“Remember, wealth has nothing to do with money, success has everything to do with failure, and life is as simple as you make it!” – John Dessauer