Being an entrepreneur, you know it is important for you to evaluate the performance of your business at regular intervals to ensure it is moving towards accomplishing its goals in the marketplace.Managing your organization’s inventory forms an essential part of this task. Otherwise, you could end up facing a situation where it your establishment’s cash flow cycle extends to a point where money constantly flow out of your business. This is because you have to incur expenses relating to the high interest charges that your vendors may impose, storage, insurance and rent for warehousing. Due to this, your business could lose potentially lucrative orders and reliable customers.
Leslie Hocker – How to manage your business organization’s inventory?
Business experts say inventory management involves ensuring your business has the right products in adequate quantities, which it can sell in the marketplace at a reasonable price at any point of time. When you are able to do this effectively, you can reduce your establishment’s carrying cost substantially while increasing its sales revenues because you do not have to hold excess stock. They point out the following techniques you can use an entrepreneur to manage your organization’s inventory effectively:
- Proper and accurate forecasting
While arriving at the sales calculation you forecast for your business in the coming months, you need to take into account certain factors. These include previous sales figures, results of sales promotions, current marketing trends and the growth rates economists predict for the economy.
- Adopt the FIFO (first in, first out) approach
Leslie Hocker, an international marketing director and business coach from, Huston, Texas, says it is prudent for entrepreneurs to adopt FIFO approach while managing their inventory. This implies they should sell their products to the public in the chronological order in which you purchase them from your vendors.
- Stop storing low-selling product
While carrying out an inventory check, you may find there are certain products that you are unable to sell for the last six months. It is prudent on your part to stop storing such items. It should also consider disposing of such stock by offering special discounts because its ties up your capital and takes up unnecessary storage space.
- Audit your inventory
Even if you make it a point to use the best inventory management software within your organization, you need to physically audit the number of products you hold as stocks. This goes a long way in ensuringthe products you have in your stocks matches with what you assume you have.
- Carry out a thorough check of stock levels at all times
You need to have a system in place within your business organization that enable you to track your stock levels at regular intervals. While carrying out such a task, you should greater priority to fast-selling expensive products you hold in your inventory.
The experts explain that with the above techniques can help to determine the exact quantity of products you need to keep in your establishment to meet the demands of your customers. Leslie Hocker says this helps to improve your organization’s cash flow as you do not need to tie up your money unnecessarily. It also goes a long way in maintaining your sales revenue.