Managing inventory is a critical aspect for many businesses, whether they sell industrial parts or serve ice cream. If you feel your inventory management lacks efficiency, you’ll find our guide helpful. We offer some tips on how to improve your inventory management.
Conduct an Inventory Audit
An inventory audit is a good place to start when rethinking how you manage inventory. A business should conduct an inventory audit at least once a year—preferably once a quarter and more often if possible.
You’ll understand the items in stock better before you start your new management strategy after an inventory audit. Furthermore, some changes you can make will jump out at you and make the process easier to begin.
Categorize Inventory
Putting everything into simple but useful categories is an effective way to improve your inventory management. To start, go through your inventory’s audit and consider whether each item is a high-ticket one, a low-ticket one, or somewhere in between.
With these simple labels, you can effectively categorize your inventory into A, B, and C and give your inventory a clear and easy-to-understand structure. Do the categories feel balanced? Could you do with less of A and more of C?
Remember the 80/20 Rule
If you don’t know already, the 80/20 rule is a solid foundation for inventory management. For most businesses that sell stock items, 80 percent of the profits come from selling about 20 percent of the stock. These items are typically lower in cost and require more frequent restocks.
Does your stock reflect the 80/20 rule? If your stock is unbalanced, it could drag down your efficiency and eat up valuable inventory space that you could better use for other items.
Consider Employing VMI Services
Another strategy is to take inventory management out of your hands. If you haven’t already, consider employing a vendor-managed inventory system (VMI) if most of your stock comes from one supplier.
In a VMI, the supplier of goods is responsible for optimizing the inventory that the distributor holds. It’s a common practice for many industrial parts businesses, and VMIs offer many advantages. Most notably, they lead to fewer headaches for the distributor.
Conclusion
We hope our guide has sparked some ideas and been helpful for those managing their inventory. As with anything in business, the little changes may not be noticeable at first. However, the improvement in efficiency and productivity will be evident after a long enough period.
