In a business that handles physical product, inventory management is one of the most important factors in a company's success. While it's not always the most exciting part of running a business, it can have a huge impact on profitability and cash flow, compared to other parts of the business. Here are a few things to keep in mind when it comes to understanding inventory management.
Get a System You're Comfortable With
There are many inventory systems out there to choose from and it's hard to say definitively which one is the best. Depending on your business model, one type of inventory system might work better than it does for another company. It's essential to try out a few different inventory programs and see which one resonates with your business model the best.
Make Real-Time Adjustments
One of the biggest mistakes that inventory managers make is waiting to enter inventory adjustments until later. Procrastination often leads to inaction, and when it comes to managing inventory, you have to know what is on hand at all times. If you're dealing with a large amount of inventory, this becomes that much more vital. Knowing how much inventory is on hand can affect reordering decisions, buying decisions, and possibly even sales. If you and your team don't know almost in real-time what is available, it can negatively impact your entire operation.
Use a Fulfillment Center
Handling some of your inventory is typically a good idea, as it allows you to see what's on hand and gives you easy access to it. However, once you get past a certain point, it can make a lot of sense to utilize a fulfillment center. A fulfillment center is ready-made to handle large numbers of SKU's and large volumes of product. It allows you to focus on what you do best, and let the professionals handle the bulk of your inventory management. Fulfillment centers can help you avoid leasing more space, avoid hiring more employees, and help you keep costs down. A good fulfillment center can help you scale up your business quickly and efficiently, while keeping costs at a manageable level.
Overall, understanding how to handle your inventory might seem like a daunting task. However, with a little bit of work and the right strategy, you can tackle the task and thrive.
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