Inventory is the merchandise that a business holds for resale and inventory management is all about having the right products, in the right quantity for sale, at the right time.
As any businessperson knows, inventory is a massive cost for every business. However, when managed effectively, it perks up the revenue by reducing the costs of carrying excessive inventory, thereby encouraging sales.
Here are some techniques many small business owners can apply to improve and manage their inventory and income better:
#1 Supply chain
Optimising the supply chain plays a vital role in growing and managing your business efficiently. A supply chain is a network between a company and its suppliers, crucial in the creation and sale of a product. If a business owner is able to manage his supply chain effectively, it can reduce expenses, increase revenue and boost profits.
If you wish to manage your supply chain without possible hiccups, it is important to build a strong relationship with your supplier. This means ensuring the end product is transported to the customer as promised. For that you need to be on top of processing payments, paying for the inventory and managing stock.
In order for their business to grow, it is important for SMEs to optimize the use of their supply chains.
One way of doing this is by using supply chain management software. Such software will help you track shipments, manage logistics and understand supplier relationships better, made possible with the help of data-driven facts.
You could also diversify your supplier base and look around for suppliers from all over the globe. This will reduce your dependency on a few suppliers, which could backfire on occasions, and open up global markets for you to explore and prosper in.
One can also explore the option of drop shipping. In this model, the order is fulfilled and then shipped by the supplier only after a customer places a request. This, in turn, reduces inventory costs and helps expand the range of products sold.
#2 The right wholesaler
There are 5 types of wholesalers – manufacturers, importers, exclusive distributors, regional distributors, and brokers. The kind of wholesalers you choose largely depends upon your business model. However, mostly all wholesalers take care of logistics, merchandising and delivery for you.
Always remember that the right wholesaler, one who works with manufacturers to supply massive amounts of products to retailers, can play a massive role in helping a businessman better his inventory as well as his revenue.
However, before making any purchases run a background check on the wholesaler you wish to deal with so that your inventory supply is never compromised or interrupted.
#3 Negotiating with wholesalers
The success of your business depends a lot on how well you are able to strike a deal with your wholesaler.
To ensure that you are always in a win-win situation, maintain the biggest asset of your business – your relationship with your wholesaler. This can best be achieved through open communication.
Furthermore, keep the credit terms with your wholesaler crystal clear. Always pay your wholesaler on time so that he can maintain his cash flow and keep the merchandise moving, which will, in turn, make your business grow.
It is also important to understand your wholesaler’s pricing structure. This can help you crack a good deal and influence him by showcasing great sales projections.
Make it a rule to offer an advance and give more business to a single supplier. This is sure to fetch you the best deal from a worthy wholesaler.
#4 Inventory management
Optimize your inventory by calculating your exact inventory necessity, without incurring unnecessary storage costs or creating avoidable delays in fulfilling customer orders.
This can be done with the help of effective inventory management software that can simplify the process and result in minimizing costs and maximizing profits.
Always pay special attention towards storing inventory, making inventory projections, and tracking and analyzing inventory for improving the revenue of your business.
Remember, smart inventory management is the key to growth and prosperity in any business. Create an efficient, standardized process to achieve the same, and review and revise it regularly for effective management and vital business expansion.