Businesses across all industries have a common challenge that needs addressing from day one; inventory management. Managing your stock effectively can define the success of your business, whether you are selling auto parts or running your own restaurant.
Any business that fails to manage its stock is bound to lose money, and eventually, succumb to the losses. Through effective inventory management, you can significantly reduce the money caught up in your inventory, which can then be invested in other areas of the business for faster and more sustainable growth.
In the below section we talk about some of the most common inventory management mistakes, and how you can avoid them.
Carrying high levels of inventory
While ensuring you have enough stock to meet customer demands is a critical requirement, carrying excess stock will only add to inventory costs and increase potential losses.
Some businesses tend to over stock to avoid missing out on trends, or avoiding stock outs, while others over order because they are unable to fully track their stock levels with accuracy.
Carrying too many product variations could also cause over stocking, and bind your capital in limited product categories. An important step in avoiding these mistakes is to order from a limited number of suppliers, so you can easily track the incoming orders and manage your costs.
Inaccurate stock records
Tracking your inventory levels, and taking regular stock is key to inventory management. While most companies do full stock counts once or twice every year, with newer technologies such as RFID’s, inventory counts can be done with high accuracy and frequency.
Doing stock counts only once a year might be too late to track ongoing issues with your inventory management, and can result in poor forecasting, analysis, and potentially unfulfilled customer orders.
Unqualified staff and inventory managers
Just like any other role in a business, inventory and stock managers need to be experienced and qualified, to ensure high quality outputs and accurate inventory records. It is also vital to have 1-2 stock managers who take complete ownership of the inventory, in order to ensure that any staff members don’t have any opportunities to embezzle or misuse the stock.