Has your business been wondering how to improve inventory management? By learning to practice better inventory control, your company can save time, money, and stress while boosting productivity and profitability. Inventory control is all about ordering enough inventory to quickly satisfy customer demand, but never so much that you’re unnecessarily tying up cash in stock you don’t need quite yet.
For a business to flourish, figuring out precisely how to improve inventory control is essential. But boosting inventory control is often easier said than done. Fortunately, this article will outline five proven ways to practice tighter inventory control, from selecting an effective inventory management system to improving forecasting methods.
1. Organize your business’s physical inventory
First thing’s first: you can’t practice solid inventory control unless your inventory is appropriately organized. That’s why we always recommend cleaning out your storage area, making sense of what you’ve got on hand, and then organizing inventory to work for your business.
During this time, if you haven’t done so already, you’ll want to create a robust, detailed inventory list that articulates everything your business has in stock. While you can do this by hand or via an inventory spreadsheet, these systems are limited and can make optimizing your inventory difficult.
If you’re wondering how to improve your inventory management system, the answer is technology. In fact, the most effective inventory management system is inventory software. Inventory software automates tedious tasks and offers features like barcode and QR code scanning, low stock alerts, and important date reminders. Inventory software also makes it easy to view high-resolution photos of everything you’ve got.
Most importantly, inventory software will provide you with the best insights about your inventory for the least amount of effort. These insights—from customized reports to warnings about when stock levels have dwindled too low—can help you keep just the right amount of inventory on hand, which is essential to effective inventory control.
2. Improve how you audit
While inventory management software can help you keep constant tabs on your inventory level, there’s no getting around a year-end inventory audit. By counting everything your business has in stock, you can reduce inventory shrinkage and obsolescence, two vital elements to optimizing inventory control.
For better inventory management and improved inventory control, you’ll want to tighten up counts with smarter and faster auditing. Lean on proven best practices and efficient inventory software to help you blast through inventory counts with accuracy and confidence.
If inventory audits still take way too long—even with the help of a top-notch inventory app—you might want to consider inventory cycle counts. With inventory cycle counts, you will eventually count everything on hand, but instead of auditing all items at one time, you’ll count your stock section by section over time.
3. Practice ABC analysis
For businesses that stock tons of inventory, practicing optimal inventory control can be a tall ask. Fortunately, you don’t have to obsess over every last item you stock to improve your inventory control strategy. Instead, you can purposefully identify the most critical items in your inventory and work diligently to keep those stocked at just-right levels.
The easiest way to do this is using ABC analysis, a popular method of categorizing inventory that divides your stock into three categories:
- Category A: 20% of your inventory that brings in 70% of profits
- Category B: 30% of inventory; 25% of profits
- Category C: 50% of inventory; 5% of profits
According to this inventory strategy, your business should aim to practice perfect inventory control on items in category A, then category B. You have more wiggle room in category C when it comes to inventory control.
Experience the simplest inventory management software.
4. Improve demand forecasting
A business cannot practice accurate inventory control without leaning on reliable forecasting. After all, a company cannot predict how much inventory it’ll need unless it has found a way to predict customer demand accurately.
There are various demand forecasting methods that can help you figure out just how much inventory you need to keep on hand. Chances are, your company already forecasts demand and places orders for more product accordingly.
But for most businesses, there’s still room to improve. So take some time to review your inventory records from the past few years. How have your forecasts compared to real sales and consumption? If you’ve missed the mark, perhaps a different method of forecasting could better serve your business.
You can also work with a consultant or independent expert to help you refine your forecasting numbers.
5. Learn more about your supply chain
Every business has a unique supply chain—a network of manufacturers, vendors, transporters, and more that help move products from the manufacturer to the end customer. And it’s no secret that supply chains can be quite complex, especially lately.
But by truly understanding your company’s supply chain—and addressing any vulnerabilities you may discover—your business should be able to improve both inventory management and inventory control efforts.
With more reliable suppliers and vendors in place, you’ll be able to place appropriately-sized orders with confidence.
Suppose nobody at your business is comfortable evaluating your supply chain. In that case, you might want to consider working with an objective supply chain expert who can help identify any areas of your network that could use improvement.
Sortly is a top-rated inventory management software solution designed to simplify every aspect of inventory management, including practicing optimal inventory control. With Sortly, you’ll enjoy everything from customizable inventory reports to low stock alerts that remind you when it’s time to reorder key products.
Best of all, Sortly can provide your team with the confidence to stop overordering—and start practicing truly effective inventory control.
Ready to see just how easy Sortly makes inventory management? Try Sortly free for two weeks!