Cash flow is something that every business has issues with at some point or another. It can be tricky to increase your profit margins when you are dealing with cash flow problems. And one of the biggest reasons that your business is having this problem is almost certainly due to poor inventory management.
Overspending when you are making rush orders and wasteful spending on overlapping tasks can both be eliminated when you have your inventory under control. It is the so-called low hanging fruit that should be dealt with immediately to get back to a positive cash flow so you can focus on scaling up your business.
In this article, I will give you some tips on how to best manage your inventory to streamline it and eliminate needless overspending.
1 – Tracking product information
Good record keeping is essential to just about every aspect of your business. And when it is done religiously, it will make a huge difference in how efficient your inventory control is.
You should have all SKUs, lot numbers and barcode information stored which can help to automate your process. Though barcodes are not necessary for inventory specifically, they do help to maintain control so click here to look into how to buy and register a barcode.
If you use an inventory software program that links these things, then this becomes easy and automatic so it takes less work on your part and your staff. If you are running an ecommerce store, then this is essential to not get bogged down trying to do everything yourself.
2 – Prioritize the inventory
The 80/20 rule is important to consider when ordering your inventory. This rule stipulates that 80% of your profits come from only 20% of your stock. Which means that you should be careful about your ordering.
Put a priority on the stock that is most likely to sell quickly and then keep the rest at a minimum. Take a restaurant as an example. The wine room is full with very expensive wines that sell very slowly. This creates an issue when you are trying to find space for the wines that are cheaper and sell more quickly.
Put your products into categories that will determine how many you need to have on hand to satisfy the orders so you aren’t wasting space on non sellers.
3 – Streamline your incoming process
Another situation when you want to have an inventory software is for your incoming orders. When you are receiving your stock, it is important for this process to go quickly and efficiently. If you don’t have a system that scans and then helps you to organize the stocking, then you are going to get backlogged.
This is when the problems mount as you may not be aware of what your inventory stock levels are. If the new stock hasn’t made it into the system then you may think you’ve run out of an item and take it off of your sales page when you actually have it in the building but it hasn’t been processed.