The main goal of Inventory Management
is to increase visibility while also having an organized inventory activity and a streamlined pick, pack and ship features. If you have these sorted in your inventory management, it may help your business grow and increase the customer base. The first step before implementing any inventory control technique is to understand your demand.
Thus, it becomes a crucial exercise to invest time, as well as money if required to set up advanced inventory forecasting models and be aware of reorder points. It will help you get accurate demand forecasts -- take product life cycles into consideration, identify seasonal demands, identify trends, take stock levels into account, and consider other factors such as competitor activities.
If you are a small business, implementing smart inventory management strategy clubbed with an apt inventory management software, is all you need to run smoothly. These are some of the techniques that could help grow your business.
1. ABC Analysis
Some products sell more than others. ABC analysis lets you prioritize the most important items in your inventory, putting products into categories in order of importance, with A being the most valuable and C being the least. The technique analyzes annual consumption, inventory value, and its price significance. When each category is separately analyzed, you can control the stock, allocation of funds, and human resources, in turn optimizing your business requirements.
2. Just-In-Time Stocking
For small businesses, this technique may work really well. It is easy to avoid the costs of overstocking with just-in-time (JIT) stocking. This strategy lets you order only what you need to meet immediate demand. You can always have a back-up safety stock, but this technique can help you save a lot of money by reducing warehouse costs, human resources, etc. The only issue with this technique is that it hinders the prospects of meeting increased demands as there's no back-up inventory.
This technique allows businesses to sell products to their customers without the need to stock and send the items themselves. The vendor becomes a middleman between the customer and the supplier. This technique is great for aspiring/growing entrepreneurs who are still trying different business techniques. It gives a business owner access to a multitude of products and an opportunity to test different business ideas with limited downside. You learn a lot about market trends and customer demands and can grow your business accordingly.