When you own a business, chances are your idea of success is directly correlated to how quickly and efficiently you can grow. And when your business relies on inventory, part of making sure that can happen is managing your products and materials correctly from the start. Here’s valuable information for new business owners on how to manage and maintain an organized warehouse and improve inventory efficiency.
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Inventory management deals with sourcing, storing, and selling inventory. It involves knowing what products and components you need and in what quantities to ensure you don’t run out. Your inventory matters for many reasons, not the least of which is that having a well-stocked warehouse means your customers don’t have to wait. Here are six ways to prioritize your inventory:
1. Learn how to manage your warehouse.
The first step toward managing your warehouse effectively is to create a flexible and practical design. Your warehouse should be organized so that inventory is easy to find and your employees can quickly pull orders when needed. Use a FIFO (first in first out) strategy to keep products and components fresh and revolving.
Keep in mind that there are many warehouse management practices, such as staying disorganized, that will quickly put a dent in your profits. Prioritize technology, organization, and data to keep things operating smoothly.
2. Evaluate needed stock levels.
Another crucial component of inventory management is learning how to forecast. Forecasting is the art of predicting what your sales will look like during a projected forecast period. This may be for a month, a quarter, or an entire year.
Lean Plan offers lots of great advice on how to forecast, including information on how to estimate direct cost. Remember, forecasting is a game of numbers, and learning how to do the math is the only way to know how much you intend to sell, which will be your guiding factor when deciding on how much inventory to keep in stock.
A side note here: when planning for stock, do not forget things like packaging material and machine supplies. Without these, your supply chain will be broken.
3. Group like items together.
Grouping items together works just as well in retail stores as it does in an inventory staging area. How you group inventory should be determined by what makes the most sense for your organization. If you sell clothing, for example, keep the denim separate from the leggings. This will not only help you take a visual survey of your inventory, but it can also help reduce the possibility that you will attempt to introduce new products that simply do not sell. It’s also prudent to store frequently bundled items in close proximity to reduce the time spent in your warehouse.
It is not just the products that you sell that should be grouped together based on usability. Your packaging materials, for example, should be stored in a central location. Boxes, tape, and impact-absorbent filling should be close together and conveniently placed so that everyone involved in shipping and packaging has access when they need it.
4. Invest in the right software.
Inventory management software may not be necessary for the early days of your business, but, as you grow, you can rest assured that it will only lend to your success. Utilizing things like barcode scanners and pre-populated shipping labels will speed things up and reduce human errors. The right program can help you manage your logistics and keep an eye on your overall operational expenses. Do your research before investing to find a software product that’s right for you and can scale and grow at your pace.
Of course, software extends to how you manage your employees as well. For instance, shift scheduling software can make creating schedules easier and more efficient, especially if you tend to repeat schedules throughout the workweek. These software packages also allow you to send up-to-date alerts to employees in the event of any unexpected shift changes.
5. Hire experienced employees.
This one should be obvious, but if you plan to hire employees, look for those with experience working in an inventory-reliant business. Base your choices off their complementary expertise. For example, if one of your managers is an expert organizer, make sure that the other departments are headed up by people with skills that will pair well and work in harmony.
Furthermore, treat your employees right. This is especially important in businesses where you expect strict regulations to be upheld. Compensate them appropriately, offer career enhancement opportunities, and be flexible. Remember, your employees have families, friends, and a life outside of your organization. When they are happy at work, they’ll be happier at home, and, when they know without question that you support what’s important to them, they will do everything they can to support you.
6. Always have a backup plan.
No matter how well you plan your warehouse and inventory strategy, there will always be kinks in the proverbial chain. While you cannot always predict what these are when they will happen, you can put in safeguards to help soften the blow.
Keep an overflow of your most critical inventory, have employees lined up who don’t mind working extra shifts (if necessary), and know how you will approach missed deadlines/shipments should issues arise.
Another important point to touch on here is how you plan to manage technology in case of an emergency. A power outage or cybersecurity attack could have a significant impact on your workflow. Cloud storage is your best bet for data, and you want to make sure that your IT team keeps your systems – computers, networks, and software-reliant equipment – up and running and loaded with the latest antivirus updates, firewalls, and other cybersecurity measures.
Growth does not just happen. It takes work, and much of this has to do with how you maintain and manage your inventory and warehousing space. The above tips can help you get started, but it is up to you to put yourself on the path toward success and to keep your business moving from your warehouse floor to the shipping doors.