Myths About Inventory Management
By: Larry Rausch – Vice President of Sales and Marketing
Inventory management can be very tricky. Many clients often ask us our thoughts on the best practices and the common myths when it comes to inventory management. This post will weigh in on our suggestions as to key considerations when you’re looking at this aspect of your operation.
The Myths About Inventory Management
Local Management Is Better
Some operators believe that using local warehouses are the best way to store products. That way of thinking isn’t always the most effective. When deciding where to store your stock, it will serve you better to consider where the customers are located. Which location is going to help you get products to the customers the quickest way, while providing greater order fulfillment services? Even if you fulfill the orders yourself, it may be worth it to research a hybrid fulfillment operation. When profit margins are low, saving a few dollars on shipping can be worth outsourcing to certain parts of the country.
Having More Stock Is Better
Preventing stock shortages is important. It keeps customers happy and prevents bad reviews and loss of sales. But, that doesn’t mean you should keep more stock on-hand.
When you have too much stock, you not only have your capital tied up in products sitting on shelves. Plus, you must keep in mind that trends change, customers can be fickle, and product packaging changes all the time, not to mention the shelf life of products.
You don’t want to be stuck with a surplus of products that you can’t sell.
Inventory Management Isn’t Necessary For Forecasting.
Many operators believe they can accurately forecast future sales with only past sales data. That isn’t true. Effective and accurate inventory management will help you maintain the right quantities of stock, follow trends, calculate lead time for restocking, and most importantly, know what is no longer selling and should be removed from your inventory.
Inventory Management Can Be Implemented Post Launch
Many companies try to get their business underway and then organize the inventory management later down the track. Unfortunately, this can lead to delays and complications with your product. It’s extremely important that inventory management is set up before you get started. This way when goods and materials start coming in, you are already organized. If you try to implement a system after you already have a stack of inventory, it can be chaotic and inefficient.
Inventory Management Is Separate From Sales Forecasting
When predicting consumer demand, inventory management needs to be factored into the equation. With the right tools, you can look back on previous sales and inventory history. You can derive patterns with this information and use it to sculpt your forecasting. Misconceptions and myths about inventory management can cause negative impacts on business operations. With the right software, your business can remain competitive, profitable and very informed.
Applying best practices to managing your inventory is key in leveraging efficiencies and lowering your overall costs. From analyzing sales history to having more stock on hand, using best practices in inventory management will save you time, money and reduce your headaches.
We hope this post provided you helpful information as it relates to understanding how best to manage your overall warehouse space. To speak with one of our technical experts, please call 1-216-229-9300. And thank you for reading our post.