43% of small businesses don’t keep track of their inventory, making them more vulnerable to theft, overstocking, and fraud. But even businesses with an inventory management system still struggle with these issues.
So how can you manage inventory efficiently without spending a fortune on outsourcing? Design a robust strategy that allows you to track what you have and how much money each product earns you. This information will help you plan future sales and avoid buying items that aren’t selling well.
If you don’t know where to start, here are six tips for creating a solid retail inventory management plan.
1. Keep a Record
Expensive items are more likely to be stolen and therefore need special attention. Maintaining a log of high-value items is an easy way to protect your inventory. The list should include serial numbers and descriptions, so you can identify and replace missing items with ease.
Store this record in a secure location that only authorized personnel can access. Keep this storage space locked at all times!
2. Improve Efficiency
Most inventory management solutions give you the option to automate tasks like restocking and sending invoices. These tools are often cloud-based software.
Not all businesses need or want a cloud solution. If you have a small warehouse and only use a handful of SKUs at any given time, then having those items stored in the cloud might not be worth the cost.
In that case, consider whether your business can make manual tasks more efficient through software solutions like barcode scanners and RFID tags.
3. Note the Incoming Stock
If you don’t have a system for recording stock receipts, you won’t know if your suppliers are living up to their promises. Take note of your incoming items, along with the quantity received. Then compare this data to what’s in your inventory management software to make sure that everything adds up.
You should record the following information:
- Date and time of receipt
- Name of person receiving goods (and signature)
- Name of supplier
- Where the items will be stored
If there are any faults in your order, take note of them. The supplier will typically cover the cost of damaged items. Most stock management software lets you notify your supplier of any discrepancies in an instant, so there’s no delay in repayment.
4. Assign Management Roles
You must have an inventory manager who’s responsible for monitoring the stockpile. Hiring someone to fill this role will give you a point of contact when questions arise in the warehouse.
A good way to choose an effective warehouse manager is by asking yourself the following questions:
- Do they have a good eye for detail?
- Are they able to work under pressure?
- Are they organized and efficient?
You can consider any trustworthy team member who meets these criteria for the role. The manager’s primary responsibilities will include controlling inventory levels and verifying that there are no discrepancies in your orders.
5. Be Aware of Your Storage Space
You can calculate storage space by measuring the dimensions of your building, then multiplying them by each other. For example, if your building is 10 feet (3 meters) wide and 20 feet (6 meters) long, its volume would be 200 cubic feet (5.6 cubic meters).
Calculate how much room each product takes up in cubic feet before putting it into storage. You can use an online calculator for this purpose.
Every time you add or remove an item, recalculate the available storage space. This will help you avoid having too much product in stock and running out of room.
Use an inventory Excel spreadsheet for this purpose. Excel sheets are designed for calculations, so they make it easy to figure out how much room your goods take up and how many of them you have on hand.
Create an inventory spreadsheet with three columns:
- Item name
When you receive your shipment, add the new item to the spreadsheet. Then, use one of Excel’s built-in formulas to multiply its volume by its quantity. The result will be an approximate amount of space the item will take up.
6. Invest in Training
If you want your business to be successful, employees must know how to use inventory management software. Some software vendors offer online training classes for their products that your staff can take part in at their leisure. The more training you provide for employees, the better equipped they will be at handling inventory for your company.
Your team should also understand the importance of keeping track of their supplies. Hold regular meetings with your employees to make sure everyone is on the same page and that no supplies are missing.
It’s important to have a written policy manual for employees to follow when handling inventory. The manual should include details about how frequently staff members should check the stockroom and what kinds of supplies to keep on hand. Your team can refer to this whenever they’re not clear on something that was said in a training session or meeting.
Manage Inventory Like a True Professional
You can only keep your customers happy if you maintain an adequate supply of products, so it’s important to stay on top of things. The person you hire to manage inventory in your warehouse should be able to spot potential problems before they get out of hand. Or you can use a software solution that will do the work for you.
In either case, remember to explore our business section for tips on making effective decisions for your warehouse and your entire company.