Many companies require proper
inventory management of their inventories more than others. Some companies
inventory is limited to stationery, while other deal in a variety of items
Businesses that deal in large
inventory include schools, supermarkets, shopping malls, manufacturers and even
grocery stores. Without proper inventory these businesses will rapidly go out
of stock lose business and go bankrupt.
When stocks run out and orders are
not promptly met then there is a big problem. Things go wrong and popular
brands disappear from your shelves. Here are some after effects of poor
inventory management
Drop In Revenue
If the sales continue to go down
then the small business is definitely going to lose end of month revenue. A
drastic drop in revenue might be pointers that an inventory manager isn’t doing
his job. Bad inventory can cause a revenue loss of 3 percent monthly.
Losing a paying and dedicated
customer is the most painful aspect of poor inventory management. The popular
item might even be in the store but nobody bothered to restock the shelves.
Losing a customer reduces your
customer base which invariably affects your business.
A Drop in Sales
Loss in sales is a real threat when
dealing with bad inventory management. When popular items are missing on the
shelves you sell less and the shopper just goes to another store.
Shoppers are particular about the items
they wish to buy. They have brand loyalty and are unlikely to purchase other
brands when the items are not in stock.
Such customers buy only what they
have pre-planned and move to another store that has the product.
Loss in sales is a big problem when
a small business has bad inventory management.
Better
Inventory Management
The Blue Dot System
The owner if unable to hire a
professional inventory manager can start with the blue dot system. The blue dot
system is simple potting a blue dot against the best selling items.
If you have a large inventory and you
have over 1500 best selling items append the blue dot to the items.
The simple system allows the
business owner visually identify the top selling items at a glance. What the
business owner can do is stock these top sellers for three to four weeks in advance.
Top stores using this system have
seen appreciable difference in revenue and patronage. It reduces the
frustration of items not on shelf and the frustration of not filling an order.
Although the blue dot method is
effective there are other steps required to achieve a seamless shopper’s
experience.
Good
Inventory Taking
Electronic
data
|
Poor
inventory
|
Solutions
|
Bar-code
|
Overstocked
|
Focus on best sellers
|
Scanners
|
Plfrage
|
Prepare for seasonal shoppers
|
Laptop
|
Expired goods
|
Check the shelf life of products
|
Too
Much Inventory
Having lots of inventory is capital
intensive and overstocking can be a serious problem. Some small business owners
a scared of being caught short thus result to overstocking.
Overstocking depletes the capital
and erodes the little profit business owners make.
To
Long on the Shelf
There are some items that seat to
long on the shelf without getting sold. Identify those items and reduce the
amount you buy drastically.
Unsold items are prone to damage,
depreciation, expiration and obsolescence. It is very difficult to get rid of
old inventory and some goods have to be discarded.
Some have expiring dates and proper
inventory and removal of such items is important. How to fix this problem
especially when the items are still durable is to markdown the item.
Another way is coupons, discounts,
two for one promotions and even shipping to overseas liquidators.
Make
Decent Projections
Project on the total amount of supplies
needed and when they are required. The sales books show clearly the quantity of
an item sold within a month.
This guide is effective when
choosing the right items to buy in a particular month. Seasonal items are
period based and have there own challenges.
You can speculate on the shopper’s
preference and spending ability during these special seasons.
Focus on Items that Matter Most
If you have a large inventory you
might find it difficult to accurately keep an inventory on all the items. The
solution is to focus on the best selling and important items on your shelf.
Top selling items account for 75
percent of your total sales, so reordering and restocking such items should be
your priority. Go through your inventory using a sales graph stocking each item
according to their sales, demand and popularity.
Inaccurate
Inventory Tracking
Inaccurate inventory tracking is a
major problem in large companies. They overstock an item thinking they don’t
have enough of the said item.
Buy only what you want to stock, try
not to miscount items and check pilferage patterns. If you are into
manufacturing your yield and scrap inventory is important.
The solution to inaccurate inventory
tracking is electronic data collection. The store owner can use electronic data
interchange, bar codes and scanning.
Many pharmacies use bar codes and
electronic data collection very effectively. Another way is cycle counting of a
few chosen items daily and then later compares your result with inventory
records.
Using Spreadsheets
Spreadsheets like Lotus 123 and
Microsoft excel are good to track your inventory. The problem with using these
platforms for inventory taking is the possibility of damage, loss, and wrong
data input.
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