Sometimes, simply knowing how much of a particular item you have in stock is a key to customer satisfaction. It should be noted, however, that effective inventory management is also a valuable way to keep your business running smoothly. Overstocking can tie up valuable capital. It can increase storage costs and lead to losses if your items expire or become outdated.
It’s vital to strike the right balance between having enough stock to meet demand and avoiding excess inventory. This requires careful planning and strategy. So what can you do to eliminate the problem of overstocking inventory?
Get a strong understanding of your sales trends.
It’s important to take stock (pun intended) of your company’s sales data. By monitoring and analyzing it, you will place yourself in good spot to predict future demand. It will enable you to anticipate both demand spikes and slow periods based on historical data. You will also be able to identify which products are consistently in demand and which are slower to sell. For example, clothing store owners may discover that their winter jackets sell well from October to January but drop significantly after February.
“Inventory forecasting uses data to drive decision making,” explains Abby Jenkins of NetSuite, “It’s the application of information and logic to make sure you have enough product on hand to meet customer demand without overdoing it and ordering too much that you then must pay to warehouse. Forecasters are creating more complex tools like advanced computer-based simulations and futures markets to create demand forecasts.”
Adopt a just-in-time inventory strategy.
This means that you will only order stock when it is needed. A great way to avoid overstocking, a just-in-time (JIT) inventory strategy works especially well for businesses with reliable suppliers who can deliver quickly. The fact that it helps your company to reduce storage while keeping inventory fresh is a big benefit. Another major benefit is the lower costs your business can enjoy.
“You can often reduce inventory costs with JIT inventory management,” reports Indeed, “Companies typically spend less money on inventory as the system relies on housing only the stock you need. Companies can then divert leftover funds saved from raw materials to meet other needs within the company. The labour costs may also be lower production rates often means fewer hours and people to fulfill orders in contrast to full-time production.”
Establish minimum and maximum stock levels.
It’s a good idea to set clear thresholds for when to reorder inventory and how much to keep on hand. To maintain minimum stock levels, ensure that you have enough products to meet demand until the next order arrives. To set maximum stock levels, be sure to cap how much inventory you store. This approach will provide you with a structured system to manage stock effectively without overstocking.
Taliup Register makes it easy to enjoy effortless inventory management. It allows you to simplify your workflow and easily import thousands of products and SKUs with a single click. Through customized re-order notifications, you can stay on top of your inventory levels and replenish stock before it runs out. This solution offers powerful insights into your inventory performance. It allows you to both optimize your in-store stock levels and reduce waste.
Please don’t hesitate to call Unity Payments at 1-800-661-3761 or email us at info@unitypayments.ca to learn more!
