If your business is looking for proven ways to practice better inventory control in 2023, these 10 best practices are the perfect way to get started. From reconsidering your inventory management system to crafting a realistic standard operating procedure, these tips and tricks can help companies of every size meet customer demand without burning cash on unnecessary inventory.
1. Reconsider your inventory management strategy
If your current inventory management strategy isn’t helping you save time, money, and stress, then it’s probably time to consider implementing a new inventory system.
There are three types of inventory management systems: pen-and-paper inventory lists, spreadsheets, and inventory management software or apps. All three of these systems have unique benefits and drawbacks. Typically, a business looking to improve inventory control needs to upgrade and modernize how they manage inventory, which means tracking inventory on a sheet of paper or a shared document has already proven inadequate. While a spreadsheet might seem like the next natural progression, spreadsheets can be difficult to read, error-prone, and cannot offer key automation features that reduce the everyday stresses of inventory management.
The right inventory app offers simple yet powerful features like in-app barcode and QR code scanning; customized inventory reports; the ability to sort inventory by category, location, or any other detail; low stock alerts; and detail-rich item histories. These features automate tedious inventory processes and save your business time and money while helping your team better understand what it has in stock, where it is, and how much it needs.
Many inventory apps, including Sortly, offer free trials of their products. These trials allow your business to test out more modern inventory solutions and determine whether they might be a good fit for your team.
2. Reconsider your inventory management strategy
If your business physically counts inventory every time it needs to know what’s on hand, consider implementing a perpetual inventory management strategy in 2023 instead. When a business keeps perpetual inventory, its inventory records are updated in real time. Every time one of your employees or colleagues references the company’s inventory list, all details will be accurate.
Practicing perpetual inventory doesn’t have to be difficult, either. With the help of the right inventory software, even large teams can work together to manage inventory perpetually all over the country. For example, features like in-app barcode and QR code scanners allow users to check items in and out, move items from one folder to another, or update item details in the blink of an eye.
Plus, inventory apps like Sortly are designed for remote inventory management. That means that no matter where your team members are, they can use their phones and tablets to manage inventory on one central dashboard.
3. Use reports to make data-informed decisions
Whether a business is already using inventory software or has decided to try one out in the new year, make 2023 the year when your team really leans on data-rich reports. With the help of good inventory software, these easy-to-run, easy-to-customize reports provide crucial details about your inventory, even if it’s spread out all over the globe.
Whether you want to understand asset condition and depreciation better, want to value how much cash is tied up in inventory sitting in a specific warehouse, or review how much of a certain item your business has stocked in the past, good inventory management software provides these insights whenever you need them.
4. Improve your demand forecasting
Another significant benefit of good inventory records? The ability to correctly forecast demand for inventory. While there are various ways to predict how much inventory your business will need in the future, all demand forecasting methodologies have one thing in common: they lean on excellent data.
Once your business maintains accurate, perpetual inventory records on software that enables advanced reporting, figuring out exactly what inventory you need and when will be much simpler.
5. Create an SOP your team can stick with
In 2023, commit to carving out a standard operating procedure for inventory management that your team can actually implement all year long. Instead of focusing on creating a perfect system, develop one that truly reflects the resources and time your team has.
While striving for perfect inventory control is a great goal, your team is almost sure to fall short of that. Set realistic expectations for reducing cash burn, inventory obsolescence, and inventory shrinkage, then aim to meet those goals by setting clear policies for organizing, reordering, and managing inventory across every location.
If your business manages inventory remotely or relies on large teams to track stock, keep in mind that some locations may need to deviate slightly from the SOP. Don’t be afraid to lean on trusted, on-site managers to adjust these policies—so long as those changes help bring your business closer to its inventory control goals.
6. Work with suppliers to save time, money, and stress
If your business stocks large quantities of inventory, then chances are your team spends quite a bit of time managing vendors, orders, and deliveries. In 2023, see if there are ways to make these relationships stronger, more streamlined, and less costly.
Start by identifying the vendors with which your business spends the most cash and places the most frequent orders. Determine if these relationships are still working for your business. Talk to your team about whether:
- Communication with the vendor is easy
- Orders are processed swiftly
- Stockouts are few and far between
- Deliveries are made promptly—and orders arrive complete and in excellent condition
- Minimum order quantities do not force your business to overorder inventory
If your employees highlight any frustrations or challenges, sit down and gather details. Talk to your suppliers about these concerns, and work together to remedy them. Often, a vendor can solve some of these problems simply by giving your account—and its outgoing orders—a bit more attention. Other times, you may need to search for other suppliers that better meet your business’s growing needs.
7. Create a backup plan for supply chain woes
As you evaluate your supplier relationships from 2022, you’ll also want to chat with these vendors about their predictions for demand in 2023. Since your vendors are one step closer to the top of your supply chain, they may have insights about stockouts, shortages, and other manufacturing or transportation concerns that could affect your business’s ability to meet customer demand.
Even if your suppliers have no concerns about fulfilling your orders over the next calendar year, the most prudent organizations will identify a backup plan for product shortages. Whether onboarding backup vendors now in case of problems later or asking trusted vendors to “hold” essential inventory for your business at their warehouses, there are various ways to prepare for supply chain problems.
Not sure where to begin? Start by categorizing your inventory using ABC classification. Your most profitable, most important inventory should receive the bulk of your focus during all your efforts—including during emergency planning.
8. Tackle inventory-related cash burn head on
There are various ways poor inventory management eats away at your business’s profits. Some of the most obvious culprits are inventory obsolescence and shrinkage. Whether your business needs to forecast demand better or improve how it physically secures high-value inventory, one thing is clear: when inventory “disappears” or becomes “unusable,” your organization’s profits will take a hit.
From investing in locked inventory cages to introducing asset tags, look into implementing both short-term and long-term strategies to combat waste. The easiest place to begin? Ending overordering. Simply by placing more accurate inventory orders, your business can reduce cash burn on accounts payable, storage space, and inventory management costs.
9. Ensure all employees are prepared to practice inventory control
As you put the finishing touches on your business’s 2023 inventory control strategy, you’ll want to ensure that your employees understand—and know how to implement—the new inventory system. Schedule trainings and retrainings, and ensure every employee can access all standard operating procedures.
To make these efforts painless, select an inventory app designed for all sorts of employees, not just tech-minded ones. Sortly, for example, was engineered to be intuitive, flexible, and customizable. Anybody who knows how to use a smartphone can get the hang of Sortly in a few minutes—but webinars, live customer support, and tons of helpful resources are readily available, too.
10. Keep refining all year long
While your plan to optimize inventory control in 2023 may seem rock solid on January 1st, remember that even the best strategies require adjustments from time to time. Whether weekly, monthly, or quarterly, ensure that your team keeps an eye on your business’s inventory system. Take notice of what’s working and what’s not. Talk to employees across all your locations about how things are going.
Use this feedback—plus insights from your inventory management software—to update your inventory control strategy accordingly.
Experience the simplest inventory management software.
Sortly is a top-rated inventory app designed to help businesses practice better inventory control. With key features that help save resources and a collaborative, easy-to-learn interface the whole team can use, there’s no shortage of ways Sortly can help your business get organized in 2023.
Curious about whether Sortly is a fit for your business? Try a free, two-week trial today.