Inventory management needs to be handled with care in any field and industry. Otherwise, it can create mistakes in the warehouse, lead to missed sales opportunities if products are out of stock, and tie up investment. To avoid these issues, retailers need to develop a foolproof inventory plan and execute it thoroughly. This article provides useful tips to help you manage inventory effectively.
- Refine inventory forecasting
Inventory forecasting means predicting the amount of inventory you need to fulfill orders on schedule. International retailers need to make the required adjustments to their inventory management methodology. Some aspects like base demand and trends may not change, but you need to adjust your economic order quantity and reorder points taking into account additional landed costs, customs clearances, and shipping times.
- Be mindful of holidays
With international suppliers, you need to keep local holidays in mind. For example, if you sell products in Australia but have an Indonesian supplier, you need to be prepared to tackle both the Christmas holiday season in Australia as well as local Muslim holidays in Indonesia. Prepare a holiday schedule in advance so that you are well stocked with products for more sales and make sure your lead time for inventory is not affected.
- Re-adjust lead time
By lead time, we mean the amount of time it takes for you to receive the inventory after ordering it. It includes both supply delay as well as reorder delay which are the extra days till you generate another order for a particular inventory. If you have an international supplier, you will have to wait longer to get the goods resulting in increase in lead time. So, make sure to adjust for these factors for proper inventory control and management of supply chain.
- Find trustworthy partners
This advice applies to your relationships with manufacturers, wholesalers, and suppliers. It is all the more important to find trustworthy suppliers if they are international so that you get products on schedule and in good condition. You should be comfortable with the supplier you buy goods from. If you have trust and goodwill you can save the time spent on traveling between warehouses, manufacturers, and suppliers.
- Use the services of a native consultant
It pays to know about the customs, taxes, and laws of the nation where you are producing or warehousing. For this purpose, hire the services of a native consultant who can provide you the needed information and details. For instance, if you know the inventory holding expenses in particular countries, you can save a lot of money by adjusting your techniques to benefit from the holding costs in each nation.
- Do your homework
Hiring a local consultant is not enough. Do your own research about the nation where you are manufacturing or warehousing. Learn the basic details about the country to make smarter inventory management choices.
- Use cloud-based software
Manual Excel spreadsheets would prove to be useless if you have people working in multiple locations and time zones. The solution is to migrate to the cloud as these systems update purchase orders, inventory amounts and other data in real time. This can ensure you do not end up with inventory shortage for an order or commit to a customer order that you can’t fulfill. With cloud-based inventory management software, you can access your data anywhere, anytime, on any internet-connected device. Another advantage is if an emergency brings down your hardware, computer, or spreadsheets, you can still rely on cloud-based inventory data.
- Plan well and execute it
Effective inventory management needs the help and support of different business units such as merchandising, eCommerce, marketing, and catalog. You need to manage inventory from a central promotional calendar so that everything is in control. Purchasers will know the amount of goods that needs to be bought, the fulfillment vendor will know to keep added warehouse space accessible, and the customer contact center agents can anticipate when they will face an increase in call volume. Go back and look at the sales of previous years to be well equipped for seasonal demands and increases.
- Make use of backup vendors
Don’t put all your eggs in one basket. Practice proper vendor management and have a backup vendor so that if you face any issues with your primary vendor you have another option to fall back on. This strategy can help to prevent lengthy lead times and out-of-stock problems and can make your season successful instead of a failure.
- Communicate effectively with your vendors
Make sure you communicate consistently and constantly with your vendors to anticipate issues and resolve them before they blow up. Talk to them about any problems they may face in delivering the goods on time. Be flexible and build mutual trust for successful inventory management.
- Set up compliance policies
Put in place a set of operating procedures and compliance policies for your merchandisers, vendors, and fulfillment staff members. This will enhance accuracy and efficiency as all the people involved will be aware of the methods they need to use to receive, stock, and ship products correctly. Prepare and distribute billing and product specification guidelines to make sure your operations run smoothly.
- Use advanced software
Minimize data entry mistakes by making use of barcode scanning and electronic data interchange (EDI) systems. You need to keep track of best-selling products and you can select a few goods every day to compare inventory records and actual count to avoid surprises. We recommend you move on from basic software like Excel and Lotus 123 and graduate to advanced solutions like QuickBooks or Sage 50. These accounting packages provide a central database and a dollar amount for your inventory. To select a suitable software solution, it is usually a good idea to read in-depth reviews in a trustworthy B2B software directory first.
- Back up your data
Be prepared for unforeseen emergencies and disasters by having an effective backup plan in place. Save all your important data on a pen drive, back up the data regularly, and carry the pen drive with you. You can also make use of helpful backup software like Norton Ghost and Symantec Backup Exec. Another good idea is to send a copy of your inventory data every month to your accountant.
- Recognize high-value items
You need to separate the wheat from the chaff and recognize the importance of high-value products over those that have lesser demand. The best way to do this is by performing ABC analysis which is supported by popular applications like QuickBooks, Microsoft Dynamics, and SAP. ABC analysis ensures that warehouse space is always amply available for important items that have the most demand.
- Automate inventory procedures
Automation can assist in effective inventory management. It can help you maintain inventory details accurately, and reduce the time spent to move and count items in the warehouse. You can use a simple handheld device or smartphone to track barcoded inventory products. It pays to get rid of paper processes and invest in quality inventory management systems to reduce costs and improve processes.
We hope this article has opened your eyes on what it takes to achieve effective inventory management. If you have other good tips and ideas on this topic, feel free to share them with us.