Each year, businesses spend an average of 25% of their operational budgets on managing inventory. Mainly, there are 4 types of inventory control systems that make managing inventory a simpler yet just as effective process for a business. Businesses both large and small face similar issues when searching for solutions that can simplify inventory management. Those with less than stellar inventory management practices stand to lose customers. In fact, poor inventory management practices are one of the eight leading reasons that new businesses fail according to the SCORE association.
Is inventory mismanagement really that big of a deal? If your company cares about keeping its customers happy, mismanaging inventory is a proven way to worsen that effort. Additionally, poor inventory management can cost your company buckets of cash. Having too much inventory on hand can make your company more susceptible to shrink. Conversely, not having enough inventory can prevent your company from filling orders which could potentially persuade your customers to consider a competitor.
Since managing inventories is such a hassle, who does it well and how do they do it? Apple and Amazon are world leaders when it comes to inventory management. Despite employing different tactics, they each have developed strategies that are based on decreasing the amount of time it takes for goods to be ordered and delivered to their customers. Apple ships its products directly from its factories to its customers which eliminates the need for numerous warehouses to store their wares. Amazon has fulfillment centers strategically located all around the world. Since they don’t manufacture many of their products, they focus most of their efforts on delivering shipments with an emphasis on quick turnaround times.
Not an Apple or an Amazon, no worries. Businesses of any size can benefit from tidying up their inventory management practices in just a few simple steps.
Monitor Your Inventory: Keep a close eye on which products sell faster than others. Ensure that your supply of popular products is reliably stocked.
Hire a Specialist: If your team is struggling to manage its inventory, consider hiring an inventory specialist to suggest and implement strategies that are best suited for your industry.
Use a Tracking System: Develop an internal system that audits the availability of your items. Alternatively, there are plenty of third parties that have digital solutions which can be licensed to assist with tracking your products.