When you have a solid inventory system youll know exactly how much product you

When you have a solid inventory system youll know

This preview shows page 2 - 4 out of 5 pages.

When you have a solid inventory system you’ll know exactly how much product you have, and based on sales you can project when you’ll run out and make sure you replace it on time. Not only does this help ensure you don’t lose sales (critical for cash flow), but it also lets you plan ahead for buying more so you can ensure you have enough cash set aside. 8 essential inventory management techniques Inventory management is a highly customizable part of doing business. The optimal system is different for each company. However, every business should strive to remove human error from inventory management as much as possible, which means taking of advantage inventory management software. If you run your business with Shopify, inventory management is already built in . Regardless of the system you use, the following eight techniques to will help you improve your inventory management—and cash flow. 1. Set par levels Make inventory management easier by setting “par levels” for each of your products. Par levels are the minimum amount of product that must be on hand at all times. When your inventory stock dips below the predetermined levels, you know it’s time to order more. Ideally, you’ll typically order the minimum quantity that will get you back above par. Par levels vary by product and are based on how quickly the item sells and how long it takes to get back in stock. Although setting par levels requires some research and decision-making up front, having them set will systemize the process of ordering. Not only will it make it easier for you to make decisions quickly, it will allow your staff to make decisions on your behalf. Remember that conditions change over time. Check on par levels a few times throughout the year to confirm they still make sense. If something changes in the meantime, don’t be afraid to adjust your par levels up or down. 2
Image of page 2
2. First-In First-Out (FIFO) “First-in, first-out” is an important principle of inventory management. It means your oldest stock (first-in) gets sold first (first-out), not your newest stock. This is especially important for perishable products so you don’t end up with unsellable spoilage. It’s also a good idea to practice FIFO for non-perishable products. If the same boxes are always sitting at the back, they’re more likely to get worn out. Plus, packaging design and features often change over time. You don’t want to end up with something obsolete that you can’t sell. In order to manage a FIFO system, you’ll need an organized warehouse. This typically means adding new products from the back, or otherwise making sure old product stays at the front. If you’re working with a warehousing and fulfillment company they probably do this already, but it's a good idea to call them to confirm. 3. Manage relationships Part of successful inventory management is being able to adapt quickly. Whether you need to return a slow selling item to make room for a new product, restock a fast seller very quickly, troubleshoot manufacturing issues, or temporarily expand your storage space, it’s important to have a strong relationship with your suppliers. That way they’ll be more willing to work with you to solve problems.
Image of page 3
Image of page 4

You've reached the end of your free preview.

Want to read all 5 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes