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5 Tips to Optimize Your Inventory

Using inventory management software will enable small business owners in the distribution and manufacturing industries to manage their parts, stock, and labor more efficiently.

Here are five tips to help optimize your inventory:

1. An Integrated Business Management Solution

One fully-featured business management system will save you money in the long run, rather than having multiple systems to handle your accounting and inventory. A good business management software will include an inventory module to help optimize stock levels. All your business processes will be integrated into one solution, saving you time and money.

The inventory module will store an accurate count of inventory items so you don’t have to tie up unnecessary cash in inventory that’s not selling fast enough. You’ll be better able to calculate how much stock to have on hand, while having enough cash to spend in other areas of your business. A good business management software will identify what stock is moving quickly out of the warehouse and what is still sitting on the pallets.

2. Do an Inventory Count

Even the best inventory control system won’t keep track of human errors. Sometimes, mistakes can happen. A worker can make mistakes on customer orders and sometimes, stock can go missing. That’s when a solid physical count of inventory comes in handy. Spend the time having a formal inventory count, so you can adjust your records in your inventory control software.

3. Apply the 80/20 Principle

In many industries, 80% of your sales will come from 20% of your stock. Once you’ve analyzed your sales patterns you can apply this to purchasing a greater percentage of inventory of your most popular items, while saving on shipping costs by ordering extra stock with one order.

4. Share Inventory Data with Vendors

Share your inventory data with your vendors, so they can assist you in replenishing your stock. An efficient means of communication should be established between you and your vendor, so that they can provide your inventory in a timely manner.

5. Analyze Inventory Reports

Analyze when your customers make orders. Do you have enough stock to ship immediately, or do you make your clients wait? You could be losing money, as you can’t invoice for goods not shipped yet. Unhappy customers will find someone who can meet their needs. Stock should be shipped out in a timely manner, particularly during the busiest times of the year.

Accurately predict how much stock you need to keep on hand for your customers using a business management solution with integrated accounting and inventory features. The software will help you to evaluate each customer’s needs, so you can plan in advance.

Optimizing your inventory will allow you to effectively manage your company’s finances, and have the time to make adjustments as needed. Your business management software will provide detailed inventory reports, so you can see where you need to make changes. An integrated system will be beneficial to your business, helping it to thrive, as you’ll get your inventory under control, and be able to more accurately predict how quickly inventory will flow in and out of your warehouse.