Many organisations ignore the huge importance of inventory management.
It is directly associated with the company's profitability. The amount of money invested in inventories of finished goods in stock directly affects the practical results of the company. Effective inventory management allows an organization to reduce the wastage of valuable resources, easily meet the customer’s expectations and maximize the profit margins. But, how to manage inventory for your business? Let’s contemplate now.
Get Reports at First
Generally, inventory is done by independent auditors, managers and cashiers hired by companies for stock audit. Before launching stock inventory, they need to get reports about the supplied goods to a particular branch of the company, sold commodities, wastage report, sales through cash or online transactions, the record of employees, etc. Usually, companies provide all these reports to auditors. They can also generate such reports with the help of Inventory management software. Once you have reports, start the process of stock Inventory.
Physical Verification of Goods Is Essential
All companies owners must know that there is no shortage of dishonest employees on the floor. To fill their own pockets, they do financial misappropriations with the help of fake bills and invoices, don’t update the list of damaged goods, and steal expensive goods that are available in an excess amount. Auditors must verify the availability of sold/available/damaged goods in stock with the help of physical counting. This will help them to find out the uses of goods and unearth misappropriation.
Use The Inventory management system to Speed Up Stock Inventory
There are many methods and criteria that regulate and optimize work with stocks. You can use Inventory management software to combine all these methods together and save your time while conducting stock inventory. The inventory management software should have essential features, such as point of order, charts for showing the standard level of stocks, the value of a separate purchase, the frequency of procurement, etc. Inventory management system makes it easier to find the actual count of goods and services that must be available in a particular branch during the time of stock inventory.
Evaluate the Performance of Your Supplier
There are many companies spend large sums to purchase goods and services from external suppliers than to manufacture their own. The company's attitude to its suppliers directly affects the way its suppliers relate to it. Many companies claim that they are building partnerships with their suppliers. In most cases, this is no more than rhetoric. Most organizations have established unwritten rules of conduct for their employees in relation to suppliers to affect the performance evaluation of the supplier. Most small companies don’t the performance of their suppliers. They check the purchased materials only at the time of delivery, and if something does not fit, send it back.
Small companies cannot afford to keep an army of inspectors and technologists who collect samples and evaluate them based on established standards. However, they must know that dishonest suppliers can cause great harm to the company by supplying low-quality products.
Therefore, companies should check incoming shipment of suppliers and produce detailed data collection, to identify the degree of compliance of the supplier’s goods with their own established standards. This will help them to eliminate the wastage of goods up to a great extent.
Use 80/20 Inventory Rule
Italian economist and sociologist Wilfredo Pareto developed a simple 80/20 rule. According to this, we get 80% of the result from 20% of the effort. Apply this rule in stock inventory. You can assume that 80% of your profits are generated from 20% of your stock. Sell products and services on first in first out pattern to minimize the loss. Analyse the sales lifecycle of goods and stock only those products that are demanded by customers.
Use Barcoding to Eliminate Errors in Stock Inventory
When stock inventory is done by auditors, errors are possible. It happens because of mistakes in physical verification, typing mistakes, malfunction of inventory management software, human mistakes, etc. To avoid mistake stock inventory, use the barcoding system. In this process, auditors scan the bar-code of products and commodities. The whole information of goods is automatically updated in the system, making the stock inventory an easier task as auditors can easily verify the availability of goods in company with reports.
A few years ago, stock inventory was truly a headache for management and employees of any enterprise. Auditors have to examine everything manually and then report about it. Now, they can use the inventory management software to conduct stock inventory smoothly and accomplish it immediately. Best of Luck!