At a time when businesses are growing and advancing, it seems that an aspect such as inventory management is often ignored or underrated as one of the keys to business success. This means that one should be able to have good control over his stock so that he/she can easily meet the demands of his/her customers without having more instances of stock-out.

 It also enables you to handle any additional demands from your customers such as during festive occasions or holidays and this places you in a competitive advantage over your competitors. To have better control over your stock, make sure that you have the best practices in mind. In this blog, we will discuss some of the effective inventory management practices that you can implement in your business to increase its profitability and customer satisfaction.

#1. Having strong knowledge of your inventory and properly categorising them

This involves pointing out the form of stocks that you consider. They need to let me know how long they want me to lead for before they request me to lead again. Where does the requirement of such products stand in terms of customers or the market?Have you purchased raw materials and stocked them in expectation of the past experiences and trends?From these questions you will find out much about your inventory and how to deal with it.

Also, as soon as you report the inflow of inventory, one of the best practices you should always follow is to classify it properly. Doing an ABC analysis. Among all the methods, effective monitoring of inventory is a method of how to effectively manage your stock the best way. In this method, you identify your stock and put them in one of the following categories:In this method, you identify your stock and put them in one of the following categories:

• A: High-Value, High-Profit items deserving top priority
• B: Medium-Value; Medium-Profit items deserving reasonable attention
• C: Low-Value; Low-Profit items that don’t require too much of your time or effort

This kind of organised system helps you know the stock levels better and restock appropriately when there is a demand. 

#2. Using the right inventory management system powered by the latest technology

Currently, there are quite a few popular inventory management methods that help manage your inventory and keep it at the right level. You can implement the one among the options listed below, based on the nature, size and budget of your business.

Stock review – This is a manual process which helps small businesses the most. It includes writing down all the inventories on hand and carrying out certain sales estimates by relying on past trends.

Just in time (JIT) – This applies to companies that do not require large quantities of stocks in the warehouse to be stored for a long time. Here, the inventory is taken out for use as soon as it comes in, making it ideal for businesses that deal with seasonal commodities that may deteriorate quickly.

ABC analysis – This means that the inventory needs to be categorised in terms of the value of the inventory and the level of the stock turnover. Knowing each segment and applying the right inventory management strategy to each will definitely reduce the many problems that come with it such as having excess stock, having no stock at all and many more.

Economic order quantity (EOQ) – This kind of system assists in organising your investment and acquiring the right amount of stock to meet the demand of the customers. More to that, your inventory is properly controlled so that you can avoid high costs of holding the inventory as well as other costs.

First in first out (FIFO) / Last in first out (LIFO) – One must select it depending on the type of enterprise. FIFO is the acronym of the term first in first out and the operations of this method involve selling out products that were the first to get to the warehouse. On the contrary, in the LIFO method you will be selling the items that have recently found entry in your warehouse.

Apart from choosing one of these systems, it is important to use updated technology to make the systems work accurately. Using the right inventory management tools for automation like stock reordering, making forecasts based on market trends and historical data and more will help reduce human errors to the maximum possible extent.

#3. Training employees to work on these systems

Adopting new and sophisticated inventory management systems is only half the job done if you don’t train your employees on how to use them. Opting for TallyPrime inventory management software, which is quick to get started with, is the key. 

#4. Regular evaluations, audits and maintenance checks of inventory

Among the best practices to effectively address the inventory is to carry out audits, inspections, maintenance checks, and evaluations. These regular checks will enable you to have insight of the inventory levels at real time and thus be able to determine if they meet the customer needs. Performing inventory audits on the regular basis with the help of automated tools is also a good practice to make sure that the systems and technologies applied are functioning properly. These audits bring a lot of weight to your inventory management process, enabling you to make proper sales forecastings without compromising on aspects such as being extremely careful with stock problems at all times.

#5. Maintaining a good relationship with suppliers

While it is crucial to mind your inventory and employ efficient tools and systems to make your stock much more manageable, doing that will not guarantee profitability and efficiency of your business on its own. Building a good relationship with your suppliers, and working together with them at various levels of inventory management cycle is the way to achieve all the above goals. 

Conducting a healthy discussion with your suppliers regarding the suitable inventory levels of your business, present stock needs, expected future demand, and many other issues connected with supply chain can make your suppliers your significant business partners.

Bottom line

Since inventory management checks are vital to the profitability, efficiency and reputation of your business. Employing the best inventory management practices will help you plan your forecasts better and cater to present customer orders without any hassles. This will earn you a lot of respect and appreciation from your customers and will go a long way in making your brand a huge success.