For most SMEs, inventory management is a major asset to manage the overall stock.Inventory management software will help businesses to accurately track the stocks and manage the trade in a seamless manner. Regardless of the systems that are used by SMEs, the following techniques will help to improve your inventory management and cash flow.
1. First-In First-Out (FIFO):The first in, first out (FIFO) practice of inventory management is one of the important valuation methods of your stock.Here your oldest stock (first-in) gets sold first (first-out), not your newest stock. This is especially important for perishable products as you don’t end up with unsellable spoiled item.The FIFO method is followed so that a company would sell the oldest inventory items first and maintain the newest items in inventory.
2. Manage relationships with suppliers: In particular, having a healthy relationship with product suppliers is maintained through good material management software. Minimum order quantities are often negotiable with your suppliers. If a proper communication prevails with the supplier, then you know when you’re expecting an increase in sales so that the production can be adjusted accordingly. When a product is running behind schedule, you can pause promotions and supply or look for a temporary substitute.
3. Regular Auditing helps in maintaining stock record:Accounting software with Inventory, in most cases, helps in regular reconciliation, which is essential. You’ll be relying on your software, and reports from your warehouse to know how much product you have in stock.Accordingly, matching up the fact is important. Inventory audit is considered mandatory for keeping account of the quantity of remaining in stock. Additionally, inventory audit is absolutely necessary for an organisation with multiple branches as they have a huge stock of physical goods.
4. Inventory Forecasting: Forecasting is of utmost importance for businesses, as they deal with higher quantities of stock. The importance of inventory management exactly lies here for the accurate prediction of the product demand. Down below are a few things to look at when planning your future sales:
With an effective and proper inventory management system, one can be helped to reduce costs, keep business profitable, analyse sales patterns, predict future sales, and prepare the business for the unexpected. With proper inventory management system in place, a business has a better chance for profitability and survival.