Retailers are only sure about the exact status of their inventory 63% of the time.
A store’s inventory is one of the major sources of its revenue. Knowing the inventory at hand is, therefore, a mission-critical need for stores.
When you know the exact status of your inventory you can continually make savings from operational efficiency.
Do you want to save more on your inventory? Here are some things you can implement for better store inventory control.
Avoid Using Minimum Order Quantities
A minimum order quantity (MOQ) is the lowest level of product a company is willing to supply. It can be measured in terms of the total amount or the total number of products.
MOQs are a favorite for manufacturers and suppliers as a means of inventory management and cost control. Their aim is to make you buy more which reduces their inventory cost while increasing yours.
MOQs can saddle you with goods you may not be able to sell and therefore you need to avoid them. Do not be tempted by the offers a manufacturer or supplier can give you such that if you buy X amount you get Y for free.
If the total amount of the product will be more than you can sell, don’t go for it.
If you need a particular product from a supplier and they will not budge on their MOQ policy you can share the purchase with another retailer.
Team up and pool your order so that you can meet the MOQ without taking on more than you can sell in good time.
If there is no one you can partner with then consider paying the manufacturer or supplier a little bit more for less inventory.
If they can make more margin out of every unit, they can waive their MOQ policy for you. In the long run, it will save you money.
Reduce Lead Time to Boost Store Inventory Control
Lead time is the period it takes between when you place an order and when you receive the goods from your supplier. Lead time affects your inventory control and hence cost, in two main ways.
To avoid running out of stock, you need to maintain a level of safety stock in your inventory. That amounts to tying up your working capital in the extra goods you buy.
On the other hand, your lead time determines the overall amount of goods you buy pre-order. If your lead time is long, you will have to buy more inventory than you need out of necessity.
Reducing your lead time as part of your inventory management techniques can free up some working capital by maintaining a smaller inventory buffer. You can also buy less stock per order which will help you save.
Use Inventory Control Software
Inventory control software is a program that helps you get a handle on different aspects of your stock for optimal operations. It is a useful resource for inventory handling if you use it to your advantage.
When you automate your stock management you will be able to accurately tell when you are about to run out of a product. As a result, you can avoid stock-outs which can be costly in terms of lost sales.
Conversely, inventory control software will alert you when you are approaching overstocking levels so that you do not buy more than you need.
That inventory control agility is critical in managing inventory costs and therefore helping you save.
Inventory control software can also assist you better handle cash flow by letting you see which products require your most attention.
You can assess each product’s financial impact to determine which to order less of and which you might need to order more.
Take Advantage of Early-Pay Discounts
Suppliers at times offer discounts for their clients who decide to settle their accounts early.
These discounts can seem like relatively small amounts, but if you add them up over time, you will realize they make for significant savings.
Pay off any inventory bills you may have to cash in on these discounts. Over time such a consistent strategy will help you reduce costs without cutting back on your business.
Eliminate Dead Stock
Deadstock is inventory you have that will not sell not because it is defective but due to other reasons such as a change in customer preferences or technology for example.
Any time you have dead stock, it means that you are spending more on its storage than initially planned. The more you spend on storage, the lower you drain your margin per item.
When you find that the product you thought would sell is not moving, you should consider bundling it.
In bundling, you decide to sell the goods that form part of your deadstock with a popular item at a discounted price. The overall profit margin might be low but it saves you on storage costs.
You can also try to sell the dead stock at a discount in case a deeply discounted price point will stimulate sales.
Another way to get rid of dead stock is by donating it to charity. While this might seem on the surface as a total loss, it may not be the case if there are tax deductions.
The market value of the product will be deducted from your taxes which helps you save on your tax bill.
Once you clear your dead stock it is essential that you identify what caused your sales forecast of the product to not materialize. Add these factors into your forecasting model to avoid a repeat of the same mistakes in the future.
Reduce Your Inventory Costs
Every store needs to have a clear picture of the status of its inventory to identify areas where more savings can be made.
Greater store inventory control will help you operate in a lean manner. Lean operations help you cut on costs via savings without having to cut back on the business.
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