Efficient inventory management is one of the most important tasks for a wholesale business. Wholesale businesses deal with large volumes of products and of different kinds. Also, these goods are oftentimes from various locations. When dealing with such a huge batch, even a small improvement in operation can lead to significant gains. Here, we have discussed 5 inventory management tips. These tips can help you to reduce costs, save time, and provide better service to your clients.
5 INVENTORY MANAGEMENT TIPS
The ABC analysis in managing inventory
Depending on the kind of business, businesses can have different types of products. Some are high-value while some are mass-produced. To manage the inventory for such businesses, the ABC system of inventory management is evolved. In this system, the inventory is divided into A tier, B tier, and C tier. A-type products are the most valuable and require the most careful record keeping. B-type products are not as valuable and need some careful management. And C-tier products are either not very valuable or are in such high supply. Let’s consider an example of a mobile shop. A tier in such a business can include the newest flagship phones. B tier can include the last-gen or less expensive phones. And the phone cases or accessories can be in the C tier. This helps to systematically decide which set of products require the most attention from management at a given time.
Utilize technology for inventory management
Wholesale businesses deal with a huge scale of products. Also often the industry faces rising complexities in management. It is to sort out these issues, turning to technological solutions for inventory management proves helpful. These can range from simple staff management and tracking software to predictive inventory optimization via Artificial Intelligence. Technology can help by streamlining the product ordering process efficiently. With the use of technology, your clients can place orders and make payments conveniently online. This often takes place in the format of a mobile app or a website.
Also read: Inventory Management & its Importance for Retail Industry
First in, First out (FIFO) of inventory
This is the most commonly used inventory management strategy around the world. As the name suggests, it involves selling out the oldest products in the inventory first. This avoids the expiration or redundancy of said products. However, it is important to remember that even FIFO is not for everybody. For example, storage of wines or other alcoholic beverages does not need FIFO. In fact, in such a case, often in cases, the older the inventory, the rarer and valuable it becomes. Also, FIFO can be problematic if the value of a product has been changed from when it was purchased due to inflation or other factors. This can complicate the management of inventory prices. All in all, check your business model and market before deciding on any operating model.
Automation in inventory management
Automation in inventory management basically comes down to having software solutions in place that can handle various small tasks. This point may relate to our second tip as automation is achieved via technology. However, it is important to pay special attention to this because it has such a direct and important impact on the efficiency of any business. By simply automating as many repetitive tasks as possible, one can save valuable time that can be spent on more important tasks for the business. Automation can also reduce the amount of redundant labor your workers have to do. This to higher employee satisfaction and boosting productivity in their other work.
Reduce on-hand inventory
Having too much in your inventory can be counterproductive in many ways. It leads to a higher cost of storage, increases the management workload, and can run the risk of these products’ expiration. Now, it is certainly better to be a bit overstocked than even slightly understocked. However, too much needs to be avoided. Thankfully, there are tools available today that can track inventories and advise changes to the amount held based on various factors. As AI technology improves, we can only expect such tools to become more powerful and dynamic. For an extension of this concept, you may consider JIT (just in time) operating techniques. In the JIT system, the production is made as per the demand at a particular time.
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