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Inventory Management Benefits

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By Debbie Gregory.

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VAMBOA hopes you have enjoyed the previous five articles in this series.  Inventory Management is the final article and here we go.

Inventory management varies from store to store, company to company and industry to industry. However, the basic principles remain the same across the board. Inventory management ensures that you have the correct products in the quantities that you believe you will need. It is one part of the overall supply chain management that means that you know what you have, what you need to order, and how long it will take you go obtain more once you place your order.

Proper inventory management answers important questions, such as:

  • What items do I have?
  • How many of a specific item do I have?
  • When do I expect to run out of a specific item?
  • When do I typically run out of this item?
  • How many will I need to reorder?
  • How much stock does the supplier have of this item?
  • How long will it take for the supplier to refill their stock of this item?

How do you keep track?

There are several ways you can track your inventory. The most basic would be a simple spreadsheet where you log items in and out as you ship/sell and receive them. Another method would be to use dedicated inventory software on a computer and we have covered in the prior articles a number of viable options. Larger companies or suppliers use electronic data interchange (EDI) systems that plug directly into their enterprise resource planning (ERP) system.

What are the benefits of good Inventory management? 

Real-time Inventory Tracking:

Instead of taking the time to constantly count how many items you have in stock, an inventory management system enables you to keep track of all your inventory. You can call up any item in your inventory and check its status in moments, at any time. This saves you both time and money.

Prevents Unnecessary Ordering:

If you know how many of an item you have, you are much less likely to accidentally order too many of any one item. You do not need to rely on any possible miscommunication or recent sales that you are not yet aware of as inventory is updated in real-time.

Reductions in Cost:

Over-ordering is not simply a storage problem; it also ties up your cash reserves and can lead to loss or spoilage of product (depending on your industry). A good inventory management system enables you to be aware of exactly how much you have of something and when you will run out of it so you can avoid accidental over-ordering or waste.

Better Overall Organization:

Good inventory management helps you organize your stock or raw materials. You will clearly be able to see which items sell fast, which do not sell well, what times of the year certain items sell better than others, and more.

Better Forecasting:

If you can easily track how often products sell out, you will be able to avoid empty shelves because you will know when you need to order more before you completely run out of any product(s). Automated systems can be set up to send alerts to trigger automatic reordering of items once they reach a certain level. Inventory management systems also allow you to store and access past data so you can better forecast future sales and performance.

Improved Sales:

Utilizing a good inventory management system allows you to see when you are selling more of any items which provides you the opportunity to better promote those items to customers. It also allows you to determine which products are under performing so that you can eliminate items from your offerings that are not selling.

As you can see regardless of the size of your business or whether you are a retailer, supplier, vendor, or manufacturer, you need to be practicing solid inventory management techniques in order to always have a clear picture of what you have on hand.

To manage your work better, especially now that you and your team may be working more remotely, you may want to upgrade your computers and peripherals.  For this reason, VAMBOA has joined forces with Dell Technologies to offer VAMBOA members and friends significant discounts.

Check them out here: https://vamboa.org/dell-technologies/

If you are not yet a member of VAMBOA, we welcome you and want you to know that there are not any fees or dues.

Here is a link to join and spread the word:

https://vamboa.org/member-registration/

Inventory Mistakes to Avoid

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By Debbie Gregory.

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VAMBOA hopes that you have enjoyed the first three articles on Inventory Management and that they have provided you lots of valuable information.   We have three more articles coming and this is the first of the three.

We all know that everyone makes mistakes occasionally; but, when it comes to inventory, you want to make sure you keep those mistakes to a minimum.

Below are a few mistakes you might encounter and what you can do to solve them:

1.) Lack of Inventory Management:

This one is the BIGGIE….  If you did not invest in your inventory management at all or you don’t pay enough attention to inventory management, you are more likely to make costly mistakes. Be sure to provide you and your staff the best training as well as select the right tools for your business.

2.) Excess Inventory:

This one is obvious:  Do not buy so much stuff. Unfortunately, it is not always that simple. It is important to analyze your past sales performances to forecast what you will realistically need. Check in with your suppliers to see how quickly they can refill orders then set up an automatic reorder limit in your inventory management software to alert you when it is time to restock.

How do you get rid of excess inventory?

You are going to order too much of something at some point in time or demand for a popular item will suddenly drop.  This will happen sooner or later. What can you do? Try marking the items down on clearance to promote and sell them because people love a good deal.  Perhaps you might consider sitting on the item until next season or try a new market that may want the item.  You can also check with your suppliers to determine if they will arrange a return.

3.) Not Enough Inventory:

This is the other side of the coin.  Proper inventory management helps you better forecast your inventory and product seasons, ensuring that you buy products in the proper quantities for your demand. You really don’t want someone to order something from your website, only to discover you don’t actually have it in stock. Make sure to have a system in place that allows you to keep on top of your inventory.

4.) Miscommunications:

Miscommunications happen all the time.  They are more likely to happen if you recently   changed processes, changed software, added new hardware, added new products, or started a special promotion that you did not communicate properly to everyone else. To address these types of problems, it is best to have one person at your company handle all the ordering, or setup your inventory management system to automatically place orders for you.

5.) Shipping & Returns:

Typically, lots of sales can translate into a lot of returns. Make sure you know how you are going to deal with returns, especially if you work with a drop shipper. Will returns come to your location or to theirs? Who is responsible for making sure the returns are not damaged or unsellable? How are credits and refunds made? You do not want to be in a situation in which you issue a refund to keep your customer happy and then get stuck with the unwanted item if the supplier won’t take it back. Make sure that you have clear shipping and returns policies in place.

Inventory management today is much easier. Thanks to items including bar codes scanners, inventory software, warehouse management software, artificial intelligence, and more, businesses can handle inventory management better than ever before. We hope that these tips can help you avoid problems with your inventory.

To manage things especially now that you and your team may be working more remotely, you may want to upgrade your computers and peripherals.  For this reason, VAMBOA has joined forces with Dell Technologies to offer VAMBOA members and friends significant discounts.

Check them out here: https://vamboa.org/dell-technologies/

If you are not yet a member of VAMBOA, we welcome you and want you to know that there are not any fees or dues.   Here is a link to join and spread the word:

https://vamboa.org/member-registration/ 

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