What are the steps for improving your inventory management system?
- Know your inventory
- Optimize your inventory
- Track your inventory
- Implement inventory management techniques
In the Philippines, inventory management is a crucial part of any business to keep track of equipment and products. As of now, many businesses still rely on traditional inventory management techniques — manual bookkeeping, ordering, distribution, and restocking in particular.
Some companies, however, are already in the midst of trying out new systems for inventory management. These management systems take control of the more redundant tasks that managers have to deal with when working the inventory.
Sure, inventory management systems are a great way of reducing the efforts needed to perform it. But in most cases, these systems go as far as providing a number of useful functionalities that are sure to improve your inventory management efforts by a wide margin!
But of course, you don’t always have to rely on software and applications to improve your inventory management. For some, all you need is to better understand the basics of inventory management, in addition to a few guides and advice from experts as well. With that being said, here are 4 steps that will help you improve your inventory management efforts!
Know Your Inventory
Knowing your list of products you have is one thing, knowing every product in that list is another. Take note that knowing your products does not just mean labeling them individually. Someone that is experienced in inventory management should know all about the basics of a certain product. Experts should then delve deeper and learn more information related to that product.
A good place to start is to label inventory and segment them in your storage room. You should know whether a piece of stock is a replenishment, an excess, or an obsolete one. By doing this, you’ll have a clear idea of the stocks you have. This way, you can better understand when you have to order new stock!
Optimize your Inventory
Many businesses believe that when restocking products, you need to purchase an amount for all the products you that you have, disregarding the fact that some still have an ample supply in storage. If this happens, an excess of inventory is bound to be had, not just because you purchased products that you already have in storage, but because you would probably do this every time one of your products gets low in stocks!
Learn to identify which of your inventory is the most productive. And while you’re at it, classify all of your inventory as either high selling or low selling products. This way, you’ll know which ones you are going to have to prioritize. You’ll know which products you need to have more of and which ones to have less of!
It doesn’t really make sense to keep an even number of products when you know that item A sells twice as fast as item B, right? Following that logic, you should store the right amount of products based on how good their selling!
Track Your Inventory
Now that you know the products in your inventory and you know which ones are selling the most, the next step in improving your inventory management is to keep track of them accurately. In most cases, bookkeeping would just mean listing down what’s in your inventory for the day and updating it the next day, and the next day. This method will not provide anything accurate to your inventory management.
When you’re keeping track of your inventory, the more details are included, the better. Expand your spreadsheet by adding more relevant headings. At the end of the day, you should know where every item has gone, and if there are still enough in your inventory to last until your next purchase day.
Implement an Inventory Management Technique
The purpose of the first three steps is to make the basics of your inventory management procedure more accurate, more efficient, and overall better at its core. Once you’ve mastered the first three techniques, you should already see improvements in your inventory management efforts. To take it to the next level, however, you need to touch on the many inventory management techniques that are used by most companies out there!
The most basic and riskiest IMT is known as the Just-in-Time method. With this method, you basically wait until the last minute before you can purchase new stocks, usually in bulk and inclusive of everything in your inventory. It’s something that every retailer would probably start out with, particularly when they don’t have much experience in inventory management.
There are much safer and more consistent IMTs that can easily be implemented into your business. Be sure to choose one that will fit well and will require the least amount of adjustment in your inventory management procedures!
Some of these inventory management techniques include the ABC Analysis, Drop shipping, FIFO, LIFO, and a lot more!
Inventory management in the Philippines is not an easy thing to implement. There’s a lot of things that you need to consider and take note of in order to ensure that it’s as flawless as possible. Improving your existing inventory management is relatively easy, all you need is an open mind and the passion to learn and understand the fundamentals and apply it to all of your inventory management processes!