Prioritize your inventory, Track everything, Optimize your supply chain, Improve warehouse security are tips to Help With Inventory & Cost Control. As a retail business owner, if you have ever been able to manage the right balance of inventory in your warehouse(s) without running up excess costs, you should probably apply for a night job in the Cirque Du Soleil. That is an amazing feat of business juggling. Inventory & Cost Control and management are some of the most important aspects of managing a retail business — and also the trickiest.
On one hand, you have to keep enough inventory to avoid disappointing your customers. On the other hand, you have to avoid overstocking your warehouses to avoid running up costs in warehouse fees, maintenance, and damages to stored goods. There are a lot of grey areas between these two extremes, but it all boils down to one thing: optimizing your inventory to make sure you only carry what you need when you need it.
With a new year breathing right down our necks, you might want to get started developing a plan that will allow you to optimize your inventory while controlling and keeping down your costs in 2022. Here are a few solid tips to set you on your way.
To help you manage your inventory better, categorize your products in order of priority. Stock more of items that sell quickly and less of items that sell slowly. You can also use the ABC method of categorization. A-class items are high-ticket (expensive) products that you need less of, while C-class items are low-ticket products that have high turnover. Prioritizing your Inventory & Cost Control in this way will make it easier to use your past data of sales to know which items you need more of and which ones you need less of.
From your supply chain to products in your warehouse and the sales you make, track everything. Inventory management can get really confusing really fast; but by keeping proper track and record of all transactions to and from your warehouse; you create a solid database that you can always refer to when you need to clarify inventory issues.
Your supply chain is a big part of keeping your inventory optimized and your costs down. If, for example, you use an overseas supplier that is always late or has a supply route that has tendencies of causing damage to your goods; you run the risk of incurring extra costs and disappointing your customers. Using local suppliers is a good way to optimize your supply chain, as you can avoid many of the complications and headaches you would face when using one outside of the U.S.
If you are selling products with wearable parts, keep backups on hand. For example, if you sell automobile spare parts or medical equipment; parts like o-rings can get stretched and worn out over time in storage. Keeping this spare part at hand in a variety of sizes will allow you to quickly replace them when you need to without having to wait for replacements from a supplier. You can keep these spare parts as separate Inventory & Cost Control items to avoid losing track of them.
According to Forbes, the U.S. retail industry lost $46.8 billion in 2019 and the average loss per fraudulent employee was $1203.16. Inventory shrinkage from employee theft or mismanagement is one of the biggest dangers to keeping your costs under control. Therefore, you should invest in security plans like security cameras for your warehouses to make sure that only authorized goods are going out and everything is properly monitored.
And last but not least, invest in inventory management technology and software. Using inventory management software will allow you to create standardized methods of logging inventory. This prevents different employees from using different methods which leads to confusion.
Stay in Inventory & Cost Control in 2022
Staying on top of your inventory will go a long way in helping you manage costs and improve customer service in the coming year. There are more brands vying for the waning attention spans of customers every day; you can’t afford to let small things like mismanaged inventory get in your way.