4 Inventory Management Tips to Optimize Your Start-Up

Poor inventory control leads to a lot of money being tied up in goods that are just filling space. That's money that can be spent on marketing or equipment upgrades to grow the company. You need a certain quantity of materials and merchandise to expedite customer orders, but there's a balance between efficiency and waste. Here are some tips on better inventory management for better value.

Identify What’s Hot

Start by determining which products are moving. You may increase profits by unloading dead or slow-moving products at a discounted rate to free up space for products with better sales volumes. Organizing stock so that hot sellers are more accessible will also increase efficiency in order picking. Comparisons between sales orders and inventory levels can identify patterns with both high and low-profit goods. Track your inventory to ensure that it accurately reflects your sales and supports profitability.

Evaluate Customer History

You made need CRM software to do it effectively, but you need to know who is ordering which items at what times. If you make beverages and one customer normally orders 50 cases of mango juice every two months, but another orders 200 cases of iced tea every April, you should be able to have those items on hand in sufficient quantities when they're needed. The more accurately you can anticipate customer needs, the less likely you are to order too much or too little. 

Calculate bulk-purchases

You may be tempted to make bulk purchases for discounted prices. This can work for high-volume, high-return items. But if you're left with excess inventory, you've tied up warehouse space and cash. When making the decision whether to purchase in bulk, you have to estimate how long, based on historical sales, it would take you to sell off or use these items before you profit from the discount. If these are perishable or "fad" items, you may end up losing money.

Storage Options

Finding ways to maximize your storage space will help you to get the best value out of your warehouse. Use floor to ceiling space by installing taller racks, and overhead shelving above desks or worktables. Palletized or stackable bins are safer and more efficient for storing small items. Steel containers will safely store heavier items, while collapsible bins can save space when not in use. You can find a variety of products to organize your space by working with companies like Quantum Storage and similar businesses.

The warehouse is the logistics center of your business. The more efficiently you can manage it, the more value it will provide to your growing business.

About the author

Kara Masterson is a freelance writer from West Jordan, Utah. She graduated from the University of Utah and enjoys writing about business and finance and spending time with her dog, Max. Information credited to Fone Angels, smart phone and tablet repairs.


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