Being an entrepreneur, you know how important it is to evaluate the performance of your business at regular intervals. This goes a long way in ensuring its success in the marketplace. Inventory management form a critical part of this on-going process. It ensures that your organization has the adequate quantities of the right products at any point of time, which can sell to the general public. When you carry out this activity effectively, it goes a long way in reducing the carrying cost of holding excess stock and minimizes your insurance expenses. At the same time, it can boost your organization’s sales and improve its cash flow position.
Anju Vallabhaneni – Tips on managing your business inventory
Anju Vallabhaneni is the former Chief Executive Officer of United Software Group, Inc. He says you should try to adopt the following effective inventory management techniques to boost your organization’s bottom-line profits:
- Modify your forecasting efforts
Precise forecasting is essential for enhancing the bottom-line revenues of your organization. You need to base the sales figures you project for the near future on factors like market trends, historical sales and marketing campaign efforts. You also need to consider the growth rate prominent experts predict for the economy for the same period.
- Incorporate the FIFO (first in, first out) inventory technique
You need to organize the products you sell the public in an effective manner. It is prudent on your part to adopt the FIFO (first in, first out) technique. It implies you first dispose of those products which you purchase earlier from your suppliers. This is especially important when you are dealing with perishable commodities to avoid wastage and damage.
- Identify slow-selling stock
If you have products in your inventory, which you have been unable to sell for the last 6 to 12 months, it may be a good idea not to buy such items. You may even consider adopting effective marketing strategies like offering special discounts on such product to encourage your customers to purchase them. After all, such products are occupying unnecessary storage place and is a drain on your capital.
- Conduct a stock audit
Even when you install an effective software system in your organization to manage your inventory, you need to physically count the number of items you have. This figure should tally with what your accounting records show. Many businesses adopt various inventory management techniques to audit their stock-in-trade. These range from annual physical counting to random on-spot checking. This enables you to identify products which have storage issues.
- Quality control
This is one aspect that you should never ignore regardless of what type of products your organization deals in. You could instruct your employees search for indications of damage or improper labeling in the products your purchase from your suppliers while carrying out a stock audit.
Anju Vallabhaneni say managing your organization’s inventory effectively can go a long way in enhancing your organization’s cash flow position and bottom-line revenues. It also minimizes the storage and insurance costs you incur in holding such stock. Adopting the above five inventory techniques can help you to achieve this objective.