Is Your Inventory Controlling You – or Do You Control Your Inventory?
Controlling inventory can feel like riding a wild, untamed horse across a rocky cliffside trail. At this precise second you’re still in the saddle holding the reins, but at any moment the horse could plunge off the cliff and take you with it.
Inventory control can feel just about as scary. Are you in control of your inventory, or is it controlling you?
Software such as Sage 300cloud (formerly known as Sage 300) can help you take back the reins and guide your inventory to a safer, saner place. There are several other tips and tricks you can put into place to manage your inventory better. With software like Sage 300cloud (formerly known as Sage 300) and these steps, you can sit back and enjoy the ride.
Inventory Control Tip #1: Build a Stock List
Building a stock list can be the first and best step towards inventory control. A stock list helps you keep track of all the items in inventory as well as their costs and retail price points. With a stock list in hand, you can make smart decisions about how, when, and why to sell items.
Let’s face it—your company manufactures products to sell, not to store them in the warehouse. Yet if products are piling up in the warehouse you need to find a way to move them quickly. That’s where a stock list comes in handy.
A stock list is a list of products, annual orders, total quantity ordered annually, and the total annual cost of goods sold. When you begin tracking items in this manner, it’s easy to see at a glance what you should keep more of in your warehouse and what should be liquidated. Knowing the cost of goods (COGS) can help you make smart decisions that won’t break the bank.
Inventory Control Tip #2: Sell Off Old Products
Unsold inventory accumulates dust, not interest. Although on the balance sheet it may be listed as an asset, in truth it’s a liability since it costs more to store unsold inventory over a long period of time than it costs to manufacture it in the first place (in most cases). Therefore, it is to your advantage to sell any lingering inventory as quickly as possible.
How companies determine when to liquidate stock varies according to the company and the products it sells. Some may choose to maintain low levels of slow-selling yet unique items to please specific customers. Others may feel that six months is too long to hold onto anything. You’ll need to develop internal policies that help you create a consistent method of dealing with unsold inventory.
If you choose not to put items on sale or steep discounts, there are other ways of cleaning out your warehouse and moving unsold items. You can:
- Transfer items to a holding warehouse until you can figure out how to sell them.
- Recycle parts or materials into new products.
- Return items to the manufacturer.
- Use unsold goods as a marketing tactic; add them onto other product sales as a free gift with purchase or freebie to please your customers.
- Offer items as an incentive (buy one, get one).
Selling below COGS is never ideal. If you’d prefer, you can often donate items to a charity or not for profit. Although not all items can be donated, many can find a home with charities such as Habitat for Humanity, Goodwill, your local food bank, and the like.
Inventory Control Tip #3: Prioritize Warehouse Items Around Best Sellers
A stock list can help you organize your warehouse according to the best sellers. Best sellers or briskly selling products should be located near the shipping area to save time. Other items can be organized in the warehouse according to your stock list. Use the stock list to create a logical pattern in your warehouse where frequently sold items are near the shipping area and bins, racks, shelves, and pallets are neatly organized and labeled so everyone can find what they need.
With a complete stock list in hand, you’re in control of your warehouse. You’ll know where everything is located, how much it is worth, and how long it’s been in the warehouse. With that knowledge comes power—the power to manage your inventory so that it no longer manages you. Take back control of your inventory today.
Sage 300cloud (formerly known as Sage 300)
Sage 300cloud (formerly known as Sage 300) reduces inefficiencies and puts the power of information right at your fingertips. With Sage 300, you can manage all aspects of your business including accounting, finance, marketing, sales and customer service all from one dashboard. It improves information sharing, communications, and visibility while ensuring that everyone can access shared data through cloud-based resources.
For more information about Sage 300cloud (formerly known as Sage 300), visit IWI Consulting Group.
IWI Consulting
IWI Consulting Group helps businesses gain insights into their operations, inventory, and profitability. We provide software and support for a wide range of industries throughout Canada. For more information, please visit IWI Consulting Group or contact us today.