Inventory is an important part of every business or company. Inventory includes raw material, work in progress, and finished goods. These generate income when sold.
Inventory has the risk of getting spoiled, damaged, or getting stolen because of which it is important to go for inventory insurance. This is the reason why a business should have a proper inventory management system.
Inventory management and cash flow management go hand-in-hand, here’s how inventory management can save you some money:
- If you have food, pharmaceutical or cosmetics business, there are products which come with an expiry. If you have a good inventory management system in place, it will ensure that all products are sold in time.
- If you have a textile, electronics, or furniture business, there are products that may go out of fashion; as a result, they never sell out. A proper inventory management system would help in this situation.
- Every business stores inventory, but this has some storage and warehousing costs attached to it. An inventory management system can reduce these cost and improve cash flow.
Here are some inventory management practices every business owner should follow:
1. First-In-First-Out
By following this technique, the issues of a spoiled and dead stick can be overcome effectively.
2. Contingency planning
You must be prepared for sudden demand for an item because of which the stocks have to be sold quickly. There might be another case where the demand is not so much because of which the stock will not sell much. A time will come when the products might even be discontinued.preparing for such contingencies or situations can be achieved through inventory management.
3. Audit inventory regularly
Audits of stock can help control inventory and dispose of the old or slow-selling products also becomes easier.
4. Forecast
You should have an understanding of the markets by analyzing the demand-supply and your inventory position. Demand prediction will help you in maintaining inventory.
5. Think about using drop shipping
The drop shipping concept is in trend nowadays due to the success of ecommerce. Drop shipping refers to not keeping any goods in stock. This technique allows the exit of inventory management because of this, the storage and insurance expenses are reduced.
If you want a small business loan to manage the inventory, contact Gromor Finance for unsecured loans at affordable interest rates!
