Inventory control isn’t just an issue for small business owners, it has almost shut the doors of major corporations. According to reporting by Business 2 Community, JP Morgan lost a staggering $6 billion in 2012 due to inventory spreadsheet errors. They also report that Hershey’s once failed to deliver $100 million in candy to stores in time for Halloween due to a failure in their supply chain system. It’s easy to see how quickly poor inventory control can put your business into an unstoppable free-fall, but difficult to know how to actually tackle it.
From the automotive business to medical field, there are ways to get a better handle on your inventory to keep your business running smoothly and profits intact. Here are five best practices to help course correct your inventory problem.
Buy small parts in bulk
When you keep physical inventory that needs replacement parts, filters and supplies, it’s tough to keep everything stocked appropriately. Start by stocking up your smaller parts in bulk that can be housed efficiently, then focus on automating and systematizing your larger inventory. For example, smaller parts like o-rings can be bought in bulk in a variety of sizes so an auto shop or medical device company can keep running smoothly. Categorize the parts by size, use and how often they typically need to be pulled from the shelves. This will keep them more organized, as well as give you a clear sense of which ones are used the most and need to be ordered more frequently.
Use priority ranking
Smaller parts like o-rings are easy to keep on hand, but what if you run an automotive dealership where inventory is large, expensive and needs to be closely monitored to meet your customers’ demand? One way car dealerships keep a handle on inventory is by using priority ranking.
Here’s how it works: A dealer who sees too many makes and models of a particular car still in stock can re-rank and slow the delivery time for a few months to help balance their existing inventory. And car dealerships who offer leases can call customers months in advance to get a sense of if they’re planning to renew or what type of vehicle they’re interested in. This gives dealers a chance to retain more customers while getting a jump on inventory needs.
Build a base inventory
When you work in a business like a pharmacy with small, moving inventory that’s in high demand, it’s tempting to want to stockpile all of your supplies. But that’s a good way to tie up your cash flow and create inefficiencies in your business.
Start by studying which medications move the fastest and create a stable stockpile so you’re never out of those key medications. Of course, cold and flu season require a spike in inventory and can be automated to meet the demand. Pharmacists can also incentivize their techs with small bonuses or a longer lunch break by asking them to diligently flag expired, unpopular or any medications nearing their expiration date.
At the end of the day, your core, base inventory gives your business consistency and meets consumer demand without tying up needed cash on big stockpiles.
Whether you’re a small, local business selling your own medical device or a booming medical supply manufacturer, look to big business analytics technology to guide your inventory needs. Using tools that help demand forecasting and inventory planning systems can show you the demand centers so you know exactly what to manufacture, where to place it and where to send your representatives.
With the right planning and mindset, your inventory doesn’t have to make or break your business. Make it a priority to systematize and automate your inventory to free up more time, energy and cash flow to keep your business thriving.