Small Inventory Management Hacks
Start writing a post
Politics and Activism

Small Inventory Management Hacks

Every dollar counts for any small business seeking expansion and growth in the current highly competitive marketplace.

21
Small Inventory Management Hacks

Efficient inventory management helps businesses organize themselves better so they can offer a seamless experience and reduce costs for their customers.

mplementing cost-saving techniques that reduce fixed and variable costs related to inventory management will go a long way in improving your bottom line. This article will provide five small inventory management hacks to improve your operations.

What is inventory management?

Inventory management is the process a supplier goes through to order, store, track, use, or sell inventory or stock to retail outlets. It is end-to-end management that begins the moment you order raw materials and ends once the product lands in the hands of a customer. Effective inventory management helps you avoid the following logistical issues:

  • Increased storage costs
  • Mounting unsellable dead stock
  • Spoiled products
  • Massive order cancellation volumes
  • Missed deliveries and delayed turnover

How do operations with small inventory items manage their stock?

Here are some of the techniques that successful small businesses use to manage inventory:

Track your inventory in real-time

Small businesses must maintain up-to-date stock levels to guarantee seamless business operations. An effective way to meet this goal is to track your supply and demand balance in real-time. Real-time inventory tracking ensures adequate stock availability to meet customer demand and avoid potential backlash from customers due to any fulfillment hiccups. Use robust inventory management software to accurately track the current inventory level and quickly identify what products you need more of and which products you may need to scale down on. Inventory management software will give you some great insight into improving your inventory management processes.

Conduct demand forecasting

Even with accurate tracking of orders, you may still encounter order fulfillment issues when demand for your products spikes due to unexpected demand. Perform demand forecasting to determine the amount you should have on hand at all times. Having a buffer stock can help you avoid unnecessary procurement, overstock, and stock-outs. Some of the factors that can help you forecast demand include market trends, overall economic conditions, upcoming promotions/events, and sales data for the previous years.

Use FIFO technique

First-in, first-out (FIFO) is an effective inventory management principle that most successful businesses practice. FIFO means that your oldest inventory should be sold first. This is crucial, especially for perishable or damage-prone goods, as it helps you avoid creating unsellable items. You should also implement the FIFO principle on non-perishable products to avoid stocking outdated products with no value.

Audit and conduct inventory inspection

Reviewing and conducting regular inventory audits is an effective way to spot minor issues before they become costly problems. Successful businesses conduct regular inventory audits on a per-week and per-month basis. Although it is possible to conduct a physical inventory that involves counting everything you have on-hand, this process can be tedious. Also, physical inventory inspections disrupt normal operations and can limit your scope. The easiest way to do the audit is to rely on inventory management software that generates real-time data on the number of products you have.

Identify low-turn stock

If you have stock that has hardly sold in the last 6 to 12 months, stop stocking those items. Use different strategies to sell that stock before they become obsolete or damaged. You can use special discounts or promotions to get rid of the stock and save on space and storage costs.

What are the four types of inventory?

Inventory can be classified into the following types:

  • Raw materials & components - These are the materials a company or manufacturer uses to produce finished products. Once the product is completed, the raw materials and components used will become unrecognizable. An example of raw material is the oil used to make shampoo. Raw material inventory focuses on bits and pieces of component parts that are currently in stock but have not yet been used in the process of creating finished goods.
  • Work in progress - Work in progress (or, WIP) inventory deals with the items in production. These include raw materials, labor, overhead, and packing materials. Any direct and indirect raw materials your business uses to create finished goods would fall in the WIP inventory. For example, if you sell equipment, the packaging is considered a WIP.
  • Finished goods - These are the items that are ready to sell. This is the inventory of items you have listed for sale. Any product ready to be sold to the customer falls under the finished goods inventory category.
  • Repair & operating supplies - Maintenance, repair, and operations inventory (or, MRO) is the inventory of supplies that supports the manufacture of a product or the maintenance of a business. This inventory could be at a supplier, in storage, in transit, or out for delivery.

What are the 80/20 inventory rules?

The 80/20 inventory rule states that 80% of your results should come from 20% of your efforts. The rule is based on the Pareto principle that suggests 80% of effects come from 20% of causes. This rule can help you identify the most profitable components of your inventory so that you can be sure to always keep them in stock. You can also use the principle to determine the least profitable parts of your inventory to keep those quantities at a minimum. The following are some of the benefits of using the 80/20 inventory rule:

  • Reduce costs - You can reduce losses and costs by identifying low-value items that are not selling. When you combine this principle with automation tools such as inventory management software, you easily identify areas for improvement and opportunities for cutting costs.
  • Improved time management - By identifying which inventory tasks provide the most benefit, you will be able to organize your day for efficiency.

Optimize your inventory with Flexcon supply chain solutions

Inventory management is a critical asset that helps you minimize the cost of inventory, enhance customer experience and improve your profitability. Efficient inventory management can also help you manage spontaneous demand changes without compromising customer experience and product quality.

Leveraging a robust material handling system ensures efficient management of existing and future inventory. Such systems also make it much easier to accommodate the storage of larger inventory quantities of in-demand products. Flexcon is committed to helping you optimize your supply chain by providing customized material handling solutions that meet your needs.

We provide leading manufacturers, distributors, dealers, and businesses with material handling containers, protective packaging, dunnage, divider systems, and pallets designed to streamline your operations. Contact us today to schedule a consultation.

Report this Content
This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.
the beatles
Wikipedia Commons

For as long as I can remember, I have been listening to The Beatles. Every year, my mom would appropriately blast “Birthday” on anyone’s birthday. I knew all of the words to “Back In The U.S.S.R” by the time I was 5 (Even though I had no idea what or where the U.S.S.R was). I grew up with John, Paul, George, and Ringo instead Justin, JC, Joey, Chris and Lance (I had to google N*SYNC to remember their names). The highlight of my short life was Paul McCartney in concert twice. I’m not someone to “fangirl” but those days I fangirled hard. The music of The Beatles has gotten me through everything. Their songs have brought me more joy, peace, and comfort. I can listen to them in any situation and find what I need. Here are the best lyrics from The Beatles for every and any occasion.

Keep Reading...Show less
Being Invisible The Best Super Power

The best superpower ever? Being invisible of course. Imagine just being able to go from seen to unseen on a dime. Who wouldn't want to have the opportunity to be invisible? Superman and Batman have nothing on being invisible with their superhero abilities. Here are some things that you could do while being invisible, because being invisible can benefit your social life too.

Keep Reading...Show less
Featured

19 Lessons I'll Never Forget from Growing Up In a Small Town

There have been many lessons learned.

71322
houses under green sky
Photo by Alev Takil on Unsplash

Small towns certainly have their pros and cons. Many people who grow up in small towns find themselves counting the days until they get to escape their roots and plant new ones in bigger, "better" places. And that's fine. I'd be lying if I said I hadn't thought those same thoughts before too. We all have, but they say it's important to remember where you came from. When I think about where I come from, I can't help having an overwhelming feeling of gratitude for my roots. Being from a small town has taught me so many important lessons that I will carry with me for the rest of my life.

Keep Reading...Show less
​a woman sitting at a table having a coffee
nappy.co

I can't say "thank you" enough to express how grateful I am for you coming into my life. You have made such a huge impact on my life. I would not be the person I am today without you and I know that you will keep inspiring me to become an even better version of myself.

Keep Reading...Show less
Student Life

Waitlisted for a College Class? Here's What to Do!

Dealing with the inevitable realities of college life.

133429
college students waiting in a long line in the hallway
StableDiffusion

Course registration at college can be a big hassle and is almost never talked about. Classes you want to take fill up before you get a chance to register. You might change your mind about a class you want to take and must struggle to find another class to fit in the same time period. You also have to make sure no classes clash by time. Like I said, it's a big hassle.

This semester, I was waitlisted for two classes. Most people in this situation, especially first years, freak out because they don't know what to do. Here is what you should do when this happens.

Keep Reading...Show less

Subscribe to Our Newsletter

Facebook Comments