Inventory is the lifeblood of any goods-based business. As such, it’s important to keep the right levels of inventory so that you can meet demand without wasting space on the shelves, in your warehouse or on your website. So what’s the magic formula to maintain the perfect balance of inventory? We’ve got five top tips to help you out.
- Think Seasonally, Plan Yearly
Identify your seasonal sales products by tracking data through a retail POS app as well as your inventory control software. Once you know what’s selling and when, you can plan to order these products closer to when you’ll need them and tailor your inventory levels based on past sales.
- Use the Right Inventory Control Software
Avoiding excess inventory begins with knowing exactly what you already have. Invest in a business intelligence small business app that tracks your inventory closely. Software should track how long inventory is sitting on the shelf in your warehouse or physical store. This can help you make the most of your space, your purchasing budget and your bottom line.
- Consider JIT Products
The Holy Grail for inventory is something that doesn’t take up space until you actually need it. These are called JITs — Just In Time products. The biggest example of this approach comes from Dell Computers, which are made to order each time. Not every product you offer will be a good match for this approach, but review what you offer to see if anything can be done as a JIT which can save space.
- Identify 80/20 Rule Products
The 80/20 Rule is a standard in business. Basically it says that 80% of your sales come from about 20% of your products. This doesn’t mean you should cut out everything else, but that you should focus more on the 20% of products that drive sales. This means scaling back on orders for some products which can make room for adding new products or simply improving your purchasing budget.
- The But-It’s-Such-a-Good-Deal Trap
Entrepreneurs are a savvy bunch and they’re also always on the lookout for a great deal. But buying inventory just because it’s marked down doesn’t mean it’s a smart move in the long-term. When eyeing a deal, consider the overall price and how long it will take you to move the product. The longer it sits on the shelf, the more it cost overall.