Inventory is a pivotal area for many SMEs, and how well you manage it can either help or hinder your growth.
It’s not surprising that according to the 2016 SME Directions Survey, cashflow is the number one concern for SMEs. The reality of inventory is it ties up a lot of cash, cash that could otherwise be spent on more product to sell or on sales and marketing.
So if you’re not managing your inventory right, you could unknowingly be costing your business more money, and making growth that much harder.
Set some time aside to do a physical stock count. This may sound simple, but can sometimes be overlooked.
By creating an accurate baseline of what you have in stock, you’ll be able to compare your expectations on stock position based on any previous records you may have been keeping. You might be surprised.
Once you have a clear picture of your inventory, it’s time to see if stock is moving quickly and which stock needs a shake-up.
Slow moving stock is costly and takes a toll on your cashflow. Money is tied up in stock that’s sitting on those shelves, the depreciating values of those items and, most importantly, valuable warehouse or storage space which could be filled with fast moving stock instead.
Are you already scheduling or automating reporting from your inventory management system? If not, you definitely should be. It’s important to review your profitability regularly throughout your different product lines. If this process is automated then information will arrive to you when you need it, eliminating the time and effort of constant administration.
Your inventory movement is something you’ll want to review regularly. The same items which are flying out the door today might start dragging their heels another six months down the track. Regular reviews will start to uncover trends and give you even more insight into your business and your industry.
As your stock room or warehouse grows, it can become more chaotic and difficult to pick and pack your items if you don’t have a good system in place. Make sure your item locations are labelled clearly. You want your staff to find items easily and pick and pack in the shortest time possible. Less time in the day spent picking items means more items that can be picked, packed and shipped out.
If you want to drive efficiency even further, have a look at whether you can physically position your high moving stock closer to your warehouse pickers and reduce the walking and picking time they’re taking overall. You also want to ensure any returned items, which are in resalable condition, go back into the right locations for the next time they need to be picked. This all helps to ensure quality control over the movement of your stock.
By Stephen Canning, CEO, JCurve