In just about every business, there’s one area that could use work – inventory management. What’s odd is that most businesses sense the need to improve their management system. But, few do. Here’s how to buck the trend and stop your operational headaches.
Understand Your Product Types
The first step in managing inventory is to identify what you have. There are four basic types of inventory that fit into most business models: An item, assembly, family, and case pack.
An item is a simple product that’s delivered to and from a warehouse. There’s no packaging or assembly required and it usually comes ready to be sold to your customers. Assembly is an item that requires assembly. For example, a bike or some types of furniture might require assembly.
A family is a group of items that are similar to one another, like a t-shirt pack or t-shirts that come in different sizes. A case pack, sometimes called a “bundle,” usually contains multiples of an item that are bundled together into one box or unit.
Use SKU Numbers and Barcodes
Once you’ve identified what you have, it’s time to order and label everything. Usually, this is done with SKU numbers. A SKU number is a sort of tracking number, which is ideal for tracking inventory.
For example, if you’re using this asset tracking software to track computers, computer parts, or computer systems, for example, you’ll want to use SKUs to make sure everything is labeled and that you know where any part is at any moment in time in the shipping and distribution process.
Barcodes are another way to track inventory. Barcodes consist of a series of lines that are usually printed on a label or the product itself. The barcode can be scanned and items can be tracked electronically using barcodes, just like SKU numbers.
Track What You Sell and To Whom
Knowing what you sell, how much, and to whom can help you plan inventory restocking and can also help you predict future volume. For example, if you have a large client that consistently orders from you, it’s helpful to know how much that company is ordering so that you can guarantee shipment and supply levels for them.
Likewise, knowing how much you’re selling to that client allows you to build in financial models for your company’s annual income projections. But, tracking customer sales can also alert you of potential risks you’re taking with client acquisition and sales.
For example, if one customer makes up more than 10 percent of your sales, you know that you’re risking customer sales concentration and you need to diversify.
So, spotting volume trends can help you avoid financial problems in the future should that client or customer slow or stop buying from you.
Optimize Order Fulfillment
Optimizing order fulfillment usually means having a drop-ship option or creating a streamlined shipping system in-house. If you retain the shipping in-house, you’ll need to create a sales order in the accounting or order management system and check your inventory to guarantee product availability.
Next, you’ll need to verify cost of shipping, and charge the customer for the total amount of the product, with shipping. Finally, convert the sales order to an invoice.
If you can do this in an automated fashion, all the better.
Jack Williams has run an online shop with his wife for a few years. A passionate writer, he enjoys sharing his experiences online. You can read his articles on a variety online business and upstart blogs.