When it comes to international trade, time, and organization are some of the most important resources. By successfully managing these resources you will be able to create an advantage over your competitors. This, in turn, translates to lower costs and higher profits. Moving companies in Bahrain offer various logistics services that could help you to get a stable foothold in the local economy. One of the most popular international trading destinations in recent years is Saudi Arabia. One thing that you should remember is that when you are conducting business activities overseas, you need to outsource some of the business activities to your logistics partners. Successful partnership depends on your choice of that partner, as well as on your competencies. For this reason, we are going to share inventory management tips that will allow you to run your business more efficiently. Stay tuned.
Why is inventory management important?
Basically, inventory management is the act of keeping count of your stocked products including their weight, size, and amount. The main goal of this procedure is to help business owners to know when they are out of products, or other important inputs like raw materials. In other words, keeping track of inventory makes it possible to optimize reserves and save money on storage costs.
So, what happens if inventory management is not properly conducted?
- Stockpiling too much inventory could lead to excessive reserves and needless storing costs.
- On the other hand, not having enough reserves leads to losing money on potential customer demands that can’t be met.
- Your products could go bad if you don’t sell them on time. Another way to extend the life of some products is to pay attention to packaging. If you are not sure how to do this, consider getting packaging and crating services.
Also, proper inventory management improves the company’s cash flow control.
Inventory management tips: Top techniques
Now when we know what is inventory management and why it is important, let’s learn about the best ways to organize your stock:
- FIFO method. This abbreviation means First in – first out. In other words, your oldest stock should be sold first. This is especially important for products that have an expiry date.
- Regular auditing. The best way to be sure if the reports match the real picture is to organize a physical inventory. Inventory counting is a common practice for most companies, and they typically perform it at the end of the year.
- Divide your stock by priorities. If you offer a wide array of products, you can probably divide them into three distinct categories: High-value products that are sold rarely, Low-value products that are sold regularly, and medium-value products that are sold with medium frequency.
- Determine par levels. Par levels are the minimum amounts of certain products that you need to have at your disposal at all times. When stocks fall below that level, you know it is time to order more.
Planning and forecasting is of great help for determining inventory size
Listed above are the methods of keeping track and re-counting what you already have stockpiled. But how to know how much you need? Accurate forecasts could help you to avoid the dead stock, spoilage of products or unnecessary delays in transportation, and customs clearance procedures.
- Follow the trends on the market. When you are familiar with the current supply and demand trends you will make the inventory management procedure a lot easier.
- What is the overall state of the economy?
- Use last-season sales statistics to determine the approximate size of the inventory. This might be a rough estimate but it still gives a good insight into how much reserves you need.
- Regular subscriptions serve as an important indicator.
- Practice the 80/20 rule. Experts agree that 80% of your profits are generated from 20% of your stock. Therefore, you should conduct inventory management according to this 20 % of the stock.
What types of inventory exist?
If you wish to take good care of your inventory, you must be aware of what types of inventory exist:
- Anticipation inventory
- Decoupling inventory
- MRO goods
- Buffer inventory
- Raw materials
- Unfinished products
- Finished products
- In-transit goods
- Cycle inventory
Useful inventory management tips: Get a high-quality storage facility
When you are selling your products all over the world you must have a quality logistics network including cargo transportation and warehousing. This is the only way to ensure that your customers will be happy and satisfied. So how to pick the right warehouse? These are some of the key factors that you must take into consideration:
- Overall safety ratings. Check out if the warehouse is equipped with up-to-date monitoring systems, quality locks, and night guards.
- Accessibility. Is the warehouse easily accessible by truck or van? Are they open on weekends and during holidays? Filing to learn more about these conditions might result in unnecessary delays and disappointed customers.
- Climate control. Saudi Arabia is known for its quite warm weather. This is the reason why you should seek an air conditioned warehouse and protect your shipments from harsh external factors.
- Size. Choose the size based on your forecast and realistic needs. Don’t overpay for something that you don’t need.
Additional inventory management tips
A lot of small companies make the same mistake and have too little inventory and are thus unable to meet customers’ demands. On the other hand, some companies tend to overstock just in case. Effective inventory management is somewhere between these two extremes. So how to find the balance?
- Track sales
- Order new stocks yourself
- Invest in an inventory management program
As you can see proper inventory management is a necessary tool for an efficient business organization. We hope that you will find our inventory management tips useful and that they will help you to improve your company.