Avoid Wasting Money With These Smart Inventory Management Strategies
Whether you’re a retailer, manufacturer, dealer, wholesaler, distributor, or restaurant owner, inventory is a critical asset in your business. Because inventory is so important, many owners feel compelled to stock up their shelves, but lack the strategy to maintain it properly. This can, and probably will, spell disaster for them later.
It makes sense, to stock up your inventory to meet a potential demand, but when items start collecting dust, or turning rotten, they inevitably become wasted dollars! If you want to avoid this happening to your business, ask yourself:
Are you putting in enough time, energy, effort, and discipline into managing your inventory? Do you have a dedicated, disciplined process that tells you when you should buy? Do you have an open-to-buy system?
What kind of PO system do you have? Is it tied to an ERP? Do you know what you need, when you need it, so that you’re buying right on time?
How are you protecting the margins on what you buy? How are you dealing with vendors, pricing and shopping for an item? Once you’ve found it, how do you safeguard it?
Way too many times I’ve walked showroom floors, or through the kitchen of a restaurant, and seen so much “stuff” sitting on the shelves, while owners brag about how valuable these items are. At the end of the day, those stock items are just wasted dollars, and lost space if they’re not selling!
Tim Cook, current CEO of Apple, established his reputation in the company by becoming an inventory master. With his “Inventory is fundamentally evil” approach, he managed to reduce the amount of time a stock item sat on the shelf from months to days, and saved the company millions of dollars.
Not only was Cook focused on the shelf life of his inventory, he also built strong relationships with suppliers and trading partners, cut back on waste, and monitored costs with a hawk’s eye. It was a strategy that not only kept aging items out of Apple’s inventory, but also helped propel the company to its incredible state of profitability today!
The solution to your inventory management issues is NOT spending money; It’s managing it properly , treating it as the commodity that it is, and putting in the disciplines to maintain it EVERY day!
Your money should be focused on the items that make you the most money! If you need help establishing inventory controls in your business, feel free to reach out to me @MoscaSmallBiz.
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