12 Types Of Inventory For Business
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As a manager, you’re responsible for every aspect of your business—from scheduling employees to managing money and keeping the company on budget. That means you’re likely looking for ways to improve your processes in order to save much-needed funds. But most managers overlook one critical component that can save them both time and money: inventory management.
That’s why the experts at Sling have put together eight inventory management techniques that will help you get control of your spending. First, though, let’s discuss why inventory management so important.
The simple answer is that it saves you money and improves cash flow. It doesn’t matter if you run a small mom-and-pop restaurant, a call center, or a multi-location retail store, the inventory you have on hand can affect your bottom line.
Effective inventory management can prevent:
When you keep firm control of your inventory, you free up money that would otherwise just be sitting on a shelf. Those funds can then be used for other expenses.
Keeping firm control of your inventory also saves you time. Yes, Sling can help you save time with shift planning, labor tracking, communication, and distribution tools. But the time you and your employees spend on inventory could be better spent on more customer-focused activities.
When considering the importance of inventory management, keep this maxim in mind: “Money spent on inventory is money that is not spent on growth.” In light of that, here are eight inventory management techniques that will save you money.
Use these eight techniques to take control of your inventory, save money, and make your business run smoother.
Divide your inventory into three categories:
In a restaurant, for example, cleaning supplies would fall into category C. They have relatively low value, and you can keep a high volume on hand. Alternately, a high-end bottle of spirits might fall into category A. It costs a lot to purchase, so you’re going to keep only one or two bottles in stock.
When you divide your inventory in this way (also known as ABC Analysis or Inventory Categorization Method), you can focus time and resources on the items that make you the most money.
Check and count your inventory at least once a year. For smaller operations with less inventory, make a count twice a year, or even quarterly.
Doing so more often will give you insight into what’s moving and what’s not moving. It will also help you determine precise reorder frequency so you’re not overstocking certain items and understocking others.
Keep in mind that counting your inventory takes time and may require that you schedule more team members than you would during a normal shift. You can simplify the process by using a scheduling and time clock app like Sling.
Sling can help you create the perfect schedule and control hours worked, whether it’s inventory time or just business as usual.
FIFO stands for “first in, first out.” It’s a principle that works well for restaurants and other businesses that deal with perishable stock.
In practice, FIFO is really quite simple: oldest products (first in) should be at the front of your storage system so they’re easy to reach (first out). That way, you are constantly cycling through your inventory from oldest to newest.
Inventory management is much like employee scheduling: you can streamline both jobs by using cloud-based apps. Gone are the days of managing your inventory with a spreadsheet or, if you’re really old school, a pen and paper.
Now, managers have access to powerful software that is specifically designed for keeping track of inventory. These specialized apps can eliminate human error, miss-ships, out-of-stock items, and most other problems associated with managing an inventory.
Sling is an example of a cloud-based program specifically designed to reduce many of the common errors associated with managing a restaurant. The tools you’ll find in Sling will reduce the time you spend on scheduling your employees, improve interoffice communication, and streamline many other day-to-day tasks.
Minimum-on-hand levels (or par levels) are just what they sound like: the minimum amount of a product that must be on hand at all time. You will need to do a bit of research and analysis to set your minimum levels, but once done, it will be easier for you and your team members to make decisions about when and what to reorder.
This inventory management technique doesn’t work for every business, but when it does, it can dramatically impact your bottom line for the better. Dropshipping allows you to ship goods to your customers directly from the manufacturer or an off-site warehouse.
You may pay for this service, but chances are the cost is substantially less than what you would pay for maintaining your own inventory on-site.
Even the best inventory management plan is subject to problems from time to time. Common issues include:
How will you react when these issues come up? What will you do to solve the problem? How will an inventory issue impact the other parts of your business?
If you prepare for these eventualities before they happen, you’ll be able to avoid other, much larger, problems that could bring your business to a standstill.
When you keep your inventory records up to date at all times, you minimize the possibility that unpredicted problems (like those mentioned above) will sneak up on you. It will also be easier for your team members to provide quality customer service because they don’t have to wonder if an item is actually in stock.
Taking control of your inventory doesn’t have to be difficult. Start small with one or two of these inventory management techniques, and then work your way up to incorporating all of them. Once you’ve mastered all eight, your inventory will run like a finely tuned machine.
For more management resources, visit GetSling.com today.
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This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for specific advice.