Latest posts by chamaglalang (see all)
- Basics of Inventory Management - October 1, 2015
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- 5 Online Marketing Strategies On A Budget - September 21, 2015
Inventory keeping and tracking is a crucial component of many enterprises, especially in merchandising, and proper inventory management is key in ensuring that shop owners get the most of their investments. This holds true even for e-businesses, as the backbone of any non-service business is its products, and learning how to properly manage inventories in an exceedingly digitized commercial landscape is what separates successful internet shops from otherwise. In this article, we will share some concepts and techniques that will help proprietors manage their inventories correctly.
Labels are your best friend
Possibly the most important aspect of keeping inventories is a clean and clear labelling system; this includes labelling storage spaces, as well as the items to be put in the storage spaces. All storage spaces should be labeled, even if it is just an empty space for the time being. As long as an area or location has the potential to be a storage space for your inventories, it should have a label of its own.
Each piece of the storage puzzle should be labeled; this includes the storage space, product family or group, and individual product. A sample label could look like this: A piece of gold (Product Group #200) earrings (Item #001) that is stored on shelf 123 would have a label of 123-200-001. A labeling system could be up to your personal design; the most important aspect about it is that it should be uniform and something that you can understand.
This system allows shop owners to know at a glance what an item is and where it is stored; this practice is a very typical one for stores that have larger inventories of smaller items. The TackThis! platform can also accommodate product labelling with product descriptions, and should be utilized. Labelling should be uniform across the board and physical product labels should match the ones on spreadsheets and records, as well as the ones on the TackThis! platform to ensure proper recording.
Spread it on a spreadsheet
All inventory should be tracked properly with physical counts that are recorded. Spreadsheets make recording easier and for the most part, it is a free platform that everyone is familiar with. Many e-businesses also use cloud-based spreadsheet and document management systems such as Google Sheets/Drive and DropBox, as these applications allow store owners to access information on the go, and even while on their mobile devices. A good inventory spreadsheet should contain the following headers: Item #, Item Name, Item Family/Group, Shelf/Storage #, Item Count, and Date Stored. Item count stands for the physical number of the said item. Date stored is the date the item was received from the supplier.
Generally, an inventory count should be done before and after every sale, but this may not be easy to do for stores with a higher customer volume. In these cases, physical inventory counts should be done at least once a week; physical counts should always corroborate sales. It is the duty of each shop owner to do his or her own due diligence and ensure that inventory counts match what was sold for the time period in question. If one implements and executes a correct inventory recording system, then this kind of corroboration should not be a problem.
First in, first out
As a general rule, products enter a store’s inventory the moment it is released by the supplier to the merchandiser or seller. This is still applicable even if the shop owners themselves are their own producers of their products. This is an important rule to remember and must be emphasized again: products become a part of a store’s inventory the moment it is released by the supplier to the seller. It is then also crucial to record the date (and even time) a product enters a store’s inventory. Why? Because of FIFO.
FIFO, or First In, First Out, is an important business practice, one that is implemented in the largest and most successful merchandising and retail companies worldwide. FIFO is most applicable for perishable goods, but it is a good practice to carry nonetheless for any merchandising activity; this is because of the principle of life span.
All things have a lifespan, especially finished goods. Many products become broken or endure wear and tear even when they are not used; examples would be tarnishing in silverware, yellowing of cloth materials, and even rubber becoming brittle in footwear. A product’s lifespan often helps dictate a company’s manufacturing cycle, especially in lieu of sales that amount to a sold-out status. Given some products’ seasonal sales strengths, this may not be attainable for many e-businesses, especially because of the constraints provided by an internet store setup. That said, a disciplined and organized tracking of inventories will help small to medium enterprises keep loss expenditures down, as well as ensure product quality and always meet customer satisfaction.
It would be very detrimental for any business to suffer losses on products that never even left their storage spaces. Enter FIFO. FIFO ensures that whichever product has been in storage for the longest time should be the first item to be sold at a given notice. This is why it is important to mark the products with the date it entered the inventory. This can be done with small paper labels that can be removed before the product gets shipped out or handed out to the customer.
Mismanaged no more
Why do it? Proper inventory management does much more than ensuring neatness and organization; a well-executed inventory system reduces writeoffs and inventory losses, reduces risk of pilferage, reduces item search time, consolidates product risk, and generally just makes running a business easier. These are the small aspects of business that are felt when things are already compounded and operations are in full swing, a time when business practices might not be as easy to fix anymore. Proper inventory management ensures that the money you invested in your enterprise truly works for you, and is not needlessly spent on lost or damaged inventories and forgotten items.