When you take stock of your inventory, you have to have a physical count of everything you have on hand. This way, you can figure out if there is any discrepancy, which items you need to reorder, or if you need to do a stock adjustment. Instead of just doing that, right now we’re going to take stock of your inventory management. That means we’re going to delve into how you’re currently managing your inventory and dive into how to take stock. Then we’ll see what’s working and what needs to be fixed to make your company even more successful.
4 Ways to Take Stock
Never before has it been so easy to manage inventory.1 Why is that? Because now even small businesses have access to stock management software. Basically the same software that big corporations have been using for decades. If not better. Thus, you have a good chance of improving your inventory management and stocktaking procedure, no matter what size business you operate. With this in mind, let’s go through the following methods of taking stock of your warehouse inventory management:
- Inventory turnover ratio
- Supply chain management
- Order fulfillment
- Time management
1. Inventory Turnover Ratio
Do you know what your inventory turnover ratio is? Before you can answer, you need to know what it is. After all, it isn’t the most common term. But it is one of the most important metrics in your business. So let’s make sure we know what it is.
To calculate it, divide the total cost of all the products you sell annually (your annual COGS) by the average value of your inventory over that same time period.
Once you do that, you’ll see how many times you sell your entire inventory in a year. If this number turns out to be small, like four or less, you know you’re probably keeping too much inventory in stock. In most cases, the higher the ratio, the better. However, you don’t want it to be too high because if you’re replacing your entire inventory every other week, you risk running into a low stock level and product or item shortages.
2. Supply Chain Management
Are your suppliers doing a good job for you? Do they deliver on time or are they sometimes late, causing you to have production delays? If you notice that one or more of your suppliers are not always dependable, you should look into alternatives. Weigh the costs and benefits of choosing different suppliers for your most popular products. You can’t afford to run out of those. It’s always good to have a backup plan, especially in the winter months when snow and other poor weather make it harder for deliveries to come in on schedule.
3. Order Fulfillment
How quickly are you fulfilling customer orders? From the moment you receive a purchase order to the moment your customer receives a product, you have the opportunity to either wow your customer or disappoint them. In truth, it’s all a matter of timing and accuracy. You need to know the physical count of many products you have in stock and where they are in your warehouse. And then you’ll be able to quickly pick, pack, and ship them to your customers. Anything you can do to speed up the stock counting and order fulfillment process could make a big difference in customer satisfaction and retention.
4. Time Management
How much time do you spend on stock management or inventory management? As a business leader, you’re probably always looking for ways to free up time to focus on the most important parts of your business. Indeed, trying to manage inventory in Excel spreadsheets or on paper is usually tedious and wastes a lot of precious time. Rather than taking that route, you should consider using inventory control software. There are affordable solutions that can pay for themselves within just a few months of being implemented.
In addition, you can use an online time clock solution, like Fishbowl Time, to track employee hours. That way, you will be able to see how employees are using their time. If there are areas for improvement, it’s simple to identify them and help your workers do better. Not only that, but when you integrate Fishbowl Time with other Fishbowl software, great things happen. For example, you can add labor costs to bills of materials and work orders. Then they’ll be part of the full cost of manufacturing goods.
Take Stock Today
After taking stock of your company’s inventory management, you’ve got a better idea of how your company is doing. The right inventory control software can help you improve your inventory turnover ratio, supply chain management, order fulfillment, and time management.
We recommend Fishbowl. It gives you all the tools listed above. Sign up for an online demo today to see how it can help your business. Check it out!