Product-based businesses and retailers deal with a unique set of challenges when it comes to inventory management and control. Without the proper solutions to solve and prevent these issues, your business may unnecessarily miss out on revenue and decrease your total profit. Inventory issues also decrease customer satisfaction and lead to poor customer retention.
Keep reading to learn more about the best practices and tips used throughout the industry to handle any inventory problems that may arise.
Best Tips & Steps to Solve your Inventory Problems
Solving inventory problems can be complex. Oftentimes the cause of the problem is not obvious. As a business owner or manager, you’ll need to fact find until you have enough information to come up with a creative solution. Here are some tips and steps to help identify and solve inventory problems.
- Identify the main problem area: If you don’t know what’s wrong, you can’t fix it. Therefore, the first step to solving your inventory problems is to identify what your inventory management pain points are. This can be accomplished through proper communication and collaboration between departments, proper data and analytics, and inventory audits. Some of the issues you may encounter include frequent inventory shortages, overstocking, and inaccurate inventory counts. Possible causes include faulty demand forecasting, failure to plan or account for seasonal changes, poor communication, lack of automation, supply chain issues, changes in current market conditions or trends, vendor failures, poor ordering strategies, and poor production planning.
- Eliminate dead stock: Dead stock is any inventory that can no longer be sold, is out of season, or is otherwise irrelevant. Dead stock can be hard to get rid of, and so should be avoided at all costs. When a product becomes obsolete, you miss out on the opportunity to convert that asset back into cash. With the proper inventory management systems in place, you can reduce your chances of finding yourself with dead stock. In the event that you do have excess inventory that needs to go, your options include selling to customers at a discount, trading with other companies for different products, bundling your unwanted inventory as a package with other in-demand items, or selling in bulk at a discounted price in a liquidation sale.
- Save money on storage: Warehousing and storage can be one of the largest expenses of a retail or product-based business. This cost can be variable depending on your current inventory levels and storage needs. Consider switching warehousing vendors, eliminating some of your warehouse locations, liquidating dead stock, and cutting down on poor-performing product lines. Likewise, overstocking and overproduction should be avoided at all costs.
- Perform regular audits: There are a few different methods of audits including physical inventory counts, spot checking, and cycle counting. A physical inventory audit consists of manually counting your entire inventory at the end of each fiscal or calendar year. While this is the most comprehensive method of performing an inventory check, it’s also the most time-consuming. Spot checking involves manually counting all of the available inventory from one particular product or product line and comparing it against the current numbers in your system. Many companies prioritize top-performing products or products that are flagged as being counted incorrectly. The final method of cycle counting involves spreading out your physical inventory audit throughout the year. For example, each month you may check a different product line on a rotating schedule. This solution is ideal for larger companies with multiple warehouses and product types.
- Create an auditing strategy: With the right auditing strategy to address the issue, your business can overcome any inventory-related challenge. All of your business decisions should be data-driven, and the information obtained from your audits should be kept updated through the right kind of software or inventory management technology. Regular auditing and reporting can help your company both avoid and manage recurring inventory management problems.
- Incorporate automation: The addition of automation into your inventory management is perhaps the single best thing you can do to increase the success of your business. If you’re still relying on paperwork, Excel charts, and other outdated inventory control systems, it’s time to consider updating your processes with the latest technology. Automation eliminates the possibility of human error, saves your company both time and money, and helps identify key problem areas with your inventory. The most common types of automated inventory systems include enterprise resource planning solutions (ERP) and warehouse management systems (WMS). These systems use barcode tracking technology to increase visibility into your inventory with accurate real-time data.
- Incorporate analytics: Analytics is a key component of any successful inventory management strategy. Having access to the right data allows everyone from your Purchasing Manager to your Warehouse Manager to make informed decisions.
- Invest in software: The right software should allow your employees to access real-time inventory data from anywhere in the world, increasing visibility into your product stock and eliminating the need for manual processes. The right software can save you money and increase your efficiency. As a retail business with multiple product lines to manage, you can’t go wrong with an investment into some quality software.
- Invest in your workforce: Likewise, you can never go wrong with investing into the ongoing training and education of your employees. Poorly trained employees can increase the chances of experiencing inventory problems, while a skilled staff can help eliminate and even prevent them. If you don’t yet have the resources to manage your inventory storage and order fulfillment in-house, third party logistics providers can bring the level of expertise you need in order to succeed. No matter which method you use, all workers involved in inventory management and control should be up to date with current industry knowledge and trends.
Incorporating these tips into your business operations and taking inventory management best practices into account will go a long way towards the future success of your company.
How Kickfurther can help
As we try to leverage our business, we may fall short on resources in the beginning. Inventory problems often arise as a result of a lack of technology or manpower. Product-based businesses often struggle with cash flow since the inventory ties up a lot of cash. Therefore, other areas of the business are left struggling until the company becomes successful enough to afford more resources. While some businesses may be able to push through to get to a breaking point, most companies will experience failure taking this approach. In order to grow your business and run it properly, you’ll likely need various types of financing. The challenge with financing is that it’s often expensive and hard to qualify for, especially for small businesses.
For your inventory needs, Kickfurther can help deliver affordable inventory funding. Kickfurther is the world’s first online funding platform that enables companies access to funds they are unable to acquire through traditional sources.
For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales.
Kickfurther can help startups fund millions of dollars of inventory at costs up to 30% cheaper than the competition. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours.
The effective management of your product inventory is crucial to your business success and profitability. While there are many problems with inventory management that can arise, there are also many steps that companies can take to prevent these issues.
The use of affordable inventory funding through Kickfurther in combination with the right analytics, proper strategy, regular audits, and the incorporation of automation can help your retail or product-based business solve any inventory-related problems.