One of the most valuable lessons you can learn when it comes to inventory control is how to optimize your inventory levels. For many companies this involves reducing the number of products they keep in stock.
You can use Fishbowl Inventory’s reorder point calculator to find the threshold at which you should order more of a specific part or product. That way you’ll avoid stockouts and overstocks by keeping a steady stream coming in and going out of your warehouses and/or retail stores.
Also, calculate your inventory turnover ratio to tell how many times you’re cycling through your entire inventory on an annual basis. A high inventory turnover ratio is preferable to a low one, but you don’t want it to get too high because that could lead to shortages. It’s all about finding the right balance for your business, and Fishbowl Inventory is great at helping you do that.
Keeping your inventory levels balanced saves money in several ways. Fewer products are at risk of becoming obsolete or going past their freshness date while waiting on shelves.
This also saves on carrying costs because you don’t need to have as big a storage space to hold all of your products. In addition, by only purchasing what you need, you avoid tying up your money in idle assets. You can use that money in other, more productive ways to grow your business.
The lesson here is that to have a more efficient business, it is often the case that you need to lessen your inventory amounts to a more manageable level. There are, of course, other cases where you need to increase your inventory levels, but many companies err on the side of caution when they don’t use inventory control software to measure inventory levels in real time.
Robert Lockard is a copywriter with Fishbowl. He writes for several blogs about inventory management, manufacturing, QuickBooks, and small business. Fishbowl is the #1-requested manufacturing and warehouse management software for QuickBooks users. Robert enjoys running, reading, writing, spending time with his wife and children, and watching movies.