10 Insider tips on inventory management and wholesale order management for wholesale distribution businesses
From stocktake toreporting to receipting to labelling, this guide gives you expert advice on ways to improve your inventory management and grow your wholesale distribution or importing business.
1. Do a stocktake
The best place to start with inventory management may sound simple, but can sometimes be overlooked. Set some time aside to do a physical stock count. You’ll want to get an accurate baseline of what you have in stock as well as any raw materials, components, kits and assemblies and finished goods. When you’re done, compare this to what you thought your stock position was based on any previous records you may have been keeping. You might be surprised.
If you have a large amount of stock and the task seems daunting, consider using a barcoding system to make the process quicker.
It’s important to note: You’ll need to complete the stock counting process without interruption. Make sure there are no items being transferred in or out during the stock count. You may want to plan ahead and undertake it during a slow season or long weekend.
2. Identify the fast and slow movers
Once you have a clear picture of your inventory, it’s time to look at which stock is moving quickly and which stock needs a shake-up to get it out the door. After all, the slow moving stock is what’s really costing you: it costs you in reduced cashflow, in the depreciating values and, most importantly, in terms of your valuable warehouse space which could be filled with fast moving stock instead.
Also have a think about how to sell your slow moving stock. Can you run a targeted promotion or limited sale for that stock line?
3. Set up your reporting
Are you already scheduling or automating reporting from your inventory management system? If not, you definitely should be. It’s important to see your profitability across your different product lines.
Look at a small business solution such as a cloud-based ERP to automate your reporting.
Once you have automated reporting in place, you can also set up alerts to kick in when stock lines reach a certain aging for example. Or, you could set up dashboard reports which give you a snapshot of your highest profit stock lines for this month compared to last month.
4. Identify trends
Your inventory tracking is something you’ll want to review regularly. The same items which are flying out the door today might start dragging their heels another six months down the track. Regular reviews will start to uncover trends and give you even more insight into your business and your industry.
Are there monthly or seasonal trends for particular types of items, perhaps peaking around Christmas time as an example? Are there wider economic factors out of your control which are affecting the popularity of products at certain price points? Or perhaps you might see the decline of particular product lines at the same time as a competitor releases a similar product.
Again, a good small business software solution such as an ERP will give you the business intelligence you need to see these trends as they emerge.
5. Understand your customer
Another valuable piece of information you need is who’s ordering what. Are some of your products popular in some geographic areas, but not others? And if that’s the case, have you thought about targeting your marketing efforts based on region or other factors?
Once you get to know who’s buying which products, you can also think about consolidating your supplier freight costs. If you have a good idea of how many of your products will be bought by customers on a regular basis, you can order a larger shipment of that stock less frequently.
6. Get your suppliers in shape
When you start thinking about stock movement, you’ll undoubtedly start thinking of the other factors which impact your overall inventory management situation. For example, are your suppliers taking a week to deliver stock which flies out the door the next day due to popularity? Are they delivering to you on time and as promised, with complete shipments and without missing items or components?
7. Create a reliable receipting process
A common issue for warehouse staff is the receipt of deliveries which don’t match what’s been ordered.
Make sure your warehouse staff know to check the incoming stock against the related orders, rather than just assuming it’s all correct. If you have a receipting process in place, this can go a long way to ensuring your stock is correct as it comes in.
8. Develop a labelling system
As your stock room or warehouse grows, it can become more chaotic and difficult to pick and pack your items. For optimal inventory management, you must have a good system in place. Make sure your item locations are labelled clearly. You want your staff to find items easily and pick and pack in the shortest time possible. Less time in the day spent picking items means more items that can be picked, packed and shipped out.
You also need to ensure any returned items, which are in resalable condition, go back into the right locations for the next time they need to be picked. This all helps to ensure quality control over the movement of your stock.
9. Prevent “borrowing”
It’s part of human nature, the concept of “what they don’t know won’t hurt them”. If people with access to your warehouse know there’s no one watching, or counting the stock, there may be a temptation to “borrow” an item for home usage.
Whether there’s someone giving themselves a bonus or if there’s another explanation for missing stock, you want to know where your dollars are going. An inventory management system can give you real-time reporting on exact stock counts.
10. Fight disaster with data
If your premises burned down tomorrow, would you have a record of the amount of stock you had and the value of it? Your insurance company would want to know this type of information. It’s imperative that you have a reliable system, ideally a cloud based one such as an ERP that can provide such reports.
Summary: 10 ways to manage your stock better
These are just some of the factors which can help you improve your inventory management and grow your business.