Keeping stock on your shelves is one of the most important aspects of any business, no matter what you’re selling and whether your shelves are physical or virtual. Whether you’re a bespoke craft maker or a major sheet metal fabricator, you need to have ‘stock’ to keep customers coming back.
But how much is too much? You only have a finite amount of space in your business, you want to keep your stock relatively fresh, but you still want to make sure you have the resources needed to respond quickly no matter what order comes in. If you’re still carrying a product from two months ago, but your competition down the street has room for the latest thing, then you could be losing potential customers.
Learning how to manage stock is a careful balance, but here are five tips on how to minimise the inventory you need, while keeping the stock you want and selling what you have.
Get Yourself Organised
One of the first things you need to do is understand what you already have in order to find a way to minimise. Take a tally of the stock you have and consider how many projects are in the pipeline, confirmed or potential. Now that you have these numbers, you can make an informed decision around what stock you will need to order or produce in advance.
Of course, every project is going to be different, so you’re going to have to create custom ‘stock profiles’ for each project. You can do an analysis of your usage-per-project by calculating how much stock you had when a project began and how much stock you had once it was completed. You’ll need to do this across a period of time to build up a ‘stock profile’.
Keep Track of Everything
This point cannot be understated. Not only is it in your best interests as a business, but it’s also important in understanding the capital and assets you have stored. Keeping accurate records also allows you to account for things like seasonality and scarcity of products which drives the market price up. This will help you build a better picture of where you’re getting your goods, what price they are, and help you see if there’s anywhere you can consolidate your supply.
Learn more about FIFO inventory management
Tracking your sales doesn’t just mean keeping your eye on revenue. When done properly (and there are myriad different ways to do this) sales tracking will help you to see what your stock usage is on a particular project or product.
Let’s say customers are buying a lot more of product X than product Y, even though they are made of similar materials… Well, that tells you that the market demand for product Y is low and therefore, you don’t need to have as much. You may even put a sale on product Y to reduce your stock to minimal numbers. Or, sell it out and only get it in as a special order. If you find that a new product, product Z, is selling better than anticipated, you may want to get in the necessary resources to produce more in bulk to save money.
The 80/20 Rule
There’s a business rule that 80% of your profits will come from about 20% of your stock. You should take the time to understand this rule and incorporate it into your own business. Identify and focus on your top 20% in order to maximise the potential profit of what you are stocking.
You should keep an accurate record of what sells, how much for and what the sales lifecycle is of the items. That is, how long do they stay on your shelves from the day they are placed there, to the day they sell. Understanding the lifecycle and demand of your top products can help you to better manage your inventory for them.
Learn more about the 80/20 Rule
Invest in Technology To Help You
One of the amazing things about modern-day technology is that it has revolutionised the way that we do business. Tracking inventory has never been easier if you find the right tools for your industry and the unique needs of your stock. An all in one system is easy to use, not terribly expensive to procure and can help you keep track of your resources with every sale and project. This will save you time, energy and money.
WorkGuru offers stock management tools as part of our all-in-one platform. Your stock is the backbone of your business. Minimising the inventory you need saves and eventually makes you money, which is what business is all about.
Want to know more? Book in your free WorkGuru demo today.
[contact-form-7 id="6" title="Contact Page Form"]