It is easy to underestimate how much having optimal inventory levels matters for the overall well-being of a business. No one likes to have their money tied up in inventory forgotten somewhere in a warehouse. It is inconvenient enough to wait for the invested money to bring in profits, in addition to the inability to fulfill orders due to this lack of funds.
Although they may seem inevitable, these problems can be addressed before they escalate and leave you completely frustrated. To approach this issue strategically, you will need to identify exactly how much inventory needs to be restocked and when to do it. We will further examine these aspects in detail:
Think about what needs to be restocked and how
Instead of constantly investing in your business and directing your available funds towards research and development, it is possible that your money has been spent a little too quickly on stocks that are, in fact, locked in a warehouse and unnecessarily holding you back.
One way to predict how the sales curve will behave in the future is to analyze the performance and sales recorded in the past, during similar periods to the present. This will allow you to make sales forecasts and adjust them accurately at any time.
What you should consider the most is the product’s lifecycle – from its launch to its maturity and ultimately its decline. Managing this lifecycle will enable you to maximize the benefits of your product, regardless of the stage of life it is in.
Think about what needs to be restocked and when
A surprisingly large number of companies would prefer to passively watch their stock levels decrease and then restock, considering it to be the most obvious step. Ideally, you should know when this moment is approaching in order to prevent it. This would also prevent other problems: you will never again be unavailable when you need to fulfill customer orders, and you can also invest your money in developing other important business operations.
There are some best practices you can consider to ensure you’re doing everything right. Among them is the need to identify and prepare for slower periods in the year, identify new trends in order frequency, and order fulfillment times.
When it comes to stock levels, neither abundance nor scarcity are recommended. The primary goal for anyone should be to strive for achieving the perfect level of stocks.
Work with multiple warehouses
Working with a single warehouse is sufficient for companies in their early stages – a better financial decision. However, as your business expands, you will need to consider collaborating with more than one warehouse.
Among other benefits, you will notice that access will be easier, and delivery costs will be lower, considering that you will be operating over a larger area – thus, you will be able to fulfill all customer orders. This leads to increased customer satisfaction and, in the long run, higher profits.
When replenishing your stocks, you will also need to think about the suppliers that provide you with the respective products. Detailed research will be required when choosing your suppliers and opting for a long-term relationship with them because they too are subject to declines, poor decisions, and other events that can impact the quality and consistency of their stocks over time.
It is advisable to always be on guard, ready to notice the warning signs that may arise during your collaboration with your suppliers.
How can EDI help you better manage your stocks?
By automating the restocking process, you will be able to monitor stock levels and stay updated on the performance of your suppliers, as well as accurately track the time needed to fulfill an order. Additionally, you will be able to visualize and synchronize data from all warehouses.
You will notice improvements in several aspects: labor costs will decrease, while data will be exchanged on time and more accurately than ever. For more information, please contact us.