What is Inventory Management?
Inventory management is a business terminology that deals with tracking and charting the inventory accurately. The idea behind inventory management is to keep a track of all the things in the inventory along with the ones that have moved out. Tracking and charting orders coming in and products moving out can give you a bunch of ideas.
You can understand the supply and demand of certain products. You will always know what’s in your stock and which items need to be restocked. This will help solve the problem of understocking and overstocking and help maximize profits.
So, what are some of the things we need to keep in mind while doing inventory management?
1. Categorizing Your Inventory
One of the first steps to managing inventory is to categorize the products. You are looking to understand which items have higher value and sell quickly. You can use the ABC method for this. It’s a popular method which categorizes stocks into three types. Type A refers to stuff that has a higher value but does not sell fast.
Type B is for stocks that have a medium value and also move at a medium rate and type C refers to items that have a low value but high movement rate. Categorizing items like this can be of high value. You will always have an idea about what type of stuff is available in your inventory leading you to accurately stock them.
2. Keep a Track of Inventory
One of the best ways to be at the top of your inventory game is to keep a track of the products you have in the industry. Different businesses have different ways of doing it. But it doesn’t matter whether you own one of the liquidation stores or want to buy liquidation pallets you have to keep some general info.
You can track products by creating Stock Keeping Units which are barcodes placed on products by the business. You have to keep the supplier information of each product. The amount sold and the amount you have is another good piece of information.
Storing the product barcode can be helpful as well. The idea is to set up a system that constantly provides you with real-time feed on your inventory by tracking the products in it.
3. Regular Inventory Audits
Auditing is one of the most important tasks to take care of when it comes to inventory management. By regular audits, we don’t mean weekly, monthly, or annually. That’s because the frequency completely depends on what works best for your business. The aim is to do it.
You cannot skip out on it or do a shoddy job. If you want to manage your inventory successfully then you have to invest time and effort into auditing it. So, choose an appropriate interval.
If your inventory is very big then you choose to audit parts of it with higher frequency. If your inventory is small then you can do it bi-annually or annually. So, build an auditing system based on the size of your inventory. Focus on doing a quality job whenever you do it rather than the frequency.
4. Stock Products Based on 80/20 Rule
Every company and business has its principle of how to stock its inventory. It depends on their target audience and the market they are in. Liquidation stores will have different ways to stock up than ones in a different location.
One of the good ways to stock your inventory is to think along the lines of the 80/20 rule. The rule states that you have to stock your inventory in such a way that 20% of the products provide 80% of your total profit.
This way you can easily identify which products in your inventory provide high profit and have good movement as well. Then stock up on them and then track them well to ensure that they keep providing you with good value.
5. Form Good Relationship With Suppliers
Another good tip for Inventory Management is what you do outside. You have to maintain good relationships with all your suppliers. For any wholesale business, suppliers are very important.
They are one of the initial links to a successful supply chain. You need to be on good terms with them if you want to restock your inventory and gain priority over your competitors.
Having an open line of communication with them is very important when it comes to managing your inventory successfully. When you need to restock on important items then your supplier might notify you when they have the item in their stock and you might get an edge in the market that way.
They might even caution you when a certain item is going to be out of stock for a while. This helps you readjust rates and move products differently.
So, these were some of the tips that can help you be better at managing your inventory. When you buy liquidation pallets to stock up your inventory you will get more success if you manage it correctly.
These tips are meant to provide a sort of guideline on how to avoid certain common pitfalls. Another thing to keep in mind is to be consistent with the approaches. That way you can get better results. We hope these tips helped give you some idea about inventory management. We wish you all the best.