As a business owner or a manager, you generally juggle various duties, from overseeing the day-to-day operations of your business and handling finances to managing customers’ expectations and workforce. And if your enterprise involves the selling of goods and products, another essential task you need to prioritize is managing your inventories successfully.
In this article, we’ll explore what product inventory management is and what practices you can implement in your organization to ensure efficiency. Continue reading to learn more.
What Is Product Inventory Management?
Product inventory management involves having a proper record or monitoring system of the stocks you’re planning to sell and the probable date when the goods will be dispatched. It allows for smoother and more productive operations since businesses can ensure they have adequate stock to fulfill clients’ orders. This can go a long way in maximizing resources and boosting sales opportunities and revenue.
If you own a large business supplying products to other companies or directly to consumers, you can look for companies that offer 3PL fulfillment services to help you be more efficient.
Furthermore, here are some practices you can consider for effective product inventory management:
Implement Batch Tracking
This method involves grouping products with similar characteristics to trace their history and check whether they’ve become defective before distributing them to the customers. Some methods used to classify these products include the date of manufacture, raw materials used, expiration date, and their sources.
Batch tracking can be effective since it can help you:
- Identify quality issues on the products
- Trace any problems like breakage and confirm if other products have been affected
- Detect any potentially harmful products
- Manage the sales of perishables more effectively based on expiration dates hence reducing wastage
When using batch tracking, you can jot down all the necessary information about the products you intend to sell. Examples of this data include:
- The date you received the products
- Their expiration dates
- Materials used to assemble them
These and other product details from the batch number can also be useful for record keeping. Thus, you can access the information even if you’ve already sold the item to the buyer. And for instance, if a buyer finds any defects after purchasing and decides to return the product for a replacement, the process can be more streamlined. This also allows you to trace other defective goods in your warehouse more efficiently since you have the batch information on hand.
Since you’ll be handling multiple orders and talking to various clients, seeking assistance in managing your inventories can be convenient, allowing you to focus on other business tasks. You can check out resources like wsinc.com to help you with logistics planning and inventory and supply management.
Using The ABC Method
Essentially, the main guiding force of inventory management is product demand. Aside from knowing what consumers prefer and what products they are looking for, demand planning also allows businesses to determine which product supplies often get depleted quickly and which ones aren’t.
The ABC analysis can help you manage your inventory effectively. It involves arranging your products according to their level of importance. Thus, as a seller, the first thing to do is to categorize the products according to their priority and market demand.
To start, A in the initial (ABC) stands for the products with the highest demand. Thus, they have the highest priority, and as a seller, you need to constantly look at the remaining amount and reorder the stock before it finishes. Secondly, B refers to items or products whose demand isn’t as high. Their priority is generally medium, and items in this category are usually or mostly reordered every month.
Lastly, the third initial C refers to products whose priority is the lowest. This means that their demand in the market is low, and most customers can do without these goods. Therefore, hardly will there be any reordering of these goods.
The importance of knowing such items in your business is that it’ll help you shun buying goods that will stay there indefinitely. You can either save that money or buy more goods in category A.
With this approach, you can organize your products in order of demand, importance, value, or priority. This can help enhance the product’s visibility and access since you know where you’ve placed the high, medium, and low-priority goods. Moreover, this technique can help maximize your warehouse space.
Following FIFO Method
FIFO stands for First In First Out. And just like the name suggests, it means that the first items you bought as you stock should be the first ones to leave. To be more precise, the oldest items in your warehouse or store should be sold first.
This inventory management technique is generally for companies that sell perishable goods like food and beverages. This is especially since failure to do so can cause your business to end up with bad or spoilt products, which can cause you to start operating at a loss.
Consider The Just-In-Time Delivery Approach
Just-In-Time is another effective way of managing your inventory as you outsource your items from your suppliers. In this model, you order stock once a customer places an order for it. The advantage of this technique is that it can help you save money since you go for products you’re almost sure will all be bought by customers.
Moreover, in this inventory management method, you don’t have to fill your warehouse with unnecessary products which can become obsolete and defective in the future. The just-in-time technique could also allow you to get rid of dead stock and sell them at a throw-away price or distribute them to charity organizations.
Inventory management is fundamental for any company that sells wholesale or retail products. It helps you be more cost-efficient, meet consumers’ needs, and maintain proper organization in the warehouse.
Some techniques that can help you achieve effective inventory management include batch tracking, ABC analysis, FIFO, and Just-In-Time delivery. These techniques will not only help your company maximize its resources, but they’ll also help increase your company’s profits.