ExecutiveChronicles.com | It certainly is no rocket science to understand that inventories form the essence of a business. No matter how big and prosperous your business house is, if you run out of inventories, that’s pretty much the end of the road for you.
In all fairness, inventory means lots of number crunching. Having sufficient inventories at your disposal is important, but you can’t afford to sit on a pile of unsold inventories. Ideally, your inventories need to stand at 1.5 times the average use. Warehouses providing storage in Felixstowe would tell you how difficult it gets to get rid of unused stocks.
Getting rid of excess stocks is a job easier said than done. In order to manage your inventories efficiently, you need to employ a few best practices.
Here are some of the best practices you can put to use
- Setting minimum levels of inventories can help
Setting minimum levels of inventories for all of your products can help you immensely in your bid to stay organised. Suppose, if the par level of your smartphone stock stands at 10,000 pieces, then you’ll order more pieces the moment your stock dips below the 10,000-unit mark. It is advisable to order the min. Quantity. Take this for an example: You need to order a 1000 units if you already have 9,000 units of unsold stock lying in the warehouse. (Supposing that your par inventory count stands at 10,000 units.)
- Try the first-in first-out approach
“First-in, first-out” happens to be a great way of managing inventories. Under this setup, the oldest stock would be sold first. This practice is great if you happen to be dealing with highly perishable goods. This will help you keep spoilage at bay. You can use this approach even if the goods you’re dealing with are non-perishable in nature. It’s always a good idea to get all your old products sold out before sending out the newer ones.
- Managing your professional relationships
Efficient management of the inventory is dependent upon the kind of relationship you have with your suppliers. Get in touch with your supplier if you’re facing any kind of difficulty. Keep it transparent. This will help you keep unnecessary understandings away. Keep your supplier in the loop regarding everything. Furthermore, it is not a bad practice to ask your supplier for minimum qualities. Most importantly, a good relationship with the supplier isn’t just limited to sharing pleasantries with the client. Having a potent communication channel in place is a great way of maintaining transparency.
- Have a contingency plan in place
Future’s uncertain. Problems can creep in from anywhere. Factories and production units can go on strike at any given point in time. Under such circumstances, the stock lying in the warehouse would help you drive sales.
Various other problems/ uncertainties that might come into the picture are
- You plan to import fresh stock after witnessing a sharp increase in sales, but realize that there’s isn’t much space left in the warehouse.
- You might face acute cash crunch. Under such a situation, you’ll find it hard to pay for the stock that you’ve acquired.
- Your manufacturer might run out of the product that you’ve ordered.
- A product can also get discontinued without any kind of warning.
To top it all
You need to take all the risks associated with your business into consideration. As a businessman, you need to hope for the best while preparing yourself for the worst. Make sure that all your things are in place. Keep an emergency plan ready in case something unexpected comes up. You cannot change what’s going to happen, but you can always adapt yourself according to the conditions in order to minimize the loss.