More often than not, inventory management is something that is viewed as an administrative inconvenience. Something of a necessary evil that is done only because it has to be done. In reality however, effective inventory management has the potential to both maximise profits and reduce expenses, simply by improving the overall efficiency of the business. So rather than viewing the process as something you’d rather avoid, it makes far more sense to adopt a proactive standpoint.

Here’s a quick rundown of just a few inventory management tips that might just save your business money:

1. First of all, it can be handy to set par levels for each and every product you carry. What this basically means is determining the minimum quantity of each product you must have on-hand at all times, in order to know exactly when and where to order more. It can take some time to get the system in place and research may be needed, but it’s a great way of ensuring you never run short or end up with too much stock you can’t shift.
2. One of the most important rules when it comes to efficient inventory management is FIFO – aka first-in, first-out. Roughly translated, it’s simply a case of ensuring at all times that your oldest products are sold first, while the newest products in your inventory are reserved to be sold last. Contrary to popular belief, it is a system that should also be followed at all times when selling non-perishable products, just as is the case with perishables.
3. Never underestimate the importance and value of establishing good relationships with those you purchase your products from in the first place. Whether it’s negotiating a lower minimum order quantity to avoid excess stock or simply striking a deal for on-going or bulk purchases, you’d be surprised what they may be able to offer you if you are willing to ask. Communication with your suppliers is the key to profitable and rewarding relationships.
4. Effective inventory management also means planning for absolutely any contingency that may occur. This includes things like an unexpected surge in demand that leaves you with a stock shortfall, financial issues that mean you cannot purchase one of your most important products, finding yourself with excess stock you cannot shift, manufacturers discontinuing items you desperately need and so on. In all such instances, it is extremely important to know exactly what you will do and how you will respond, should any such eventuality occur.
5. Carrying out regular auditing of your warehouse or storage room also represents an extremely important practice when it comes to optimisation.  Even if you happen to be using the most advanced software systems on the market, you’d be surprised how often the reality of things doesn’t quite match up to what’s on-screen.
6. Last but not least, the accuracy of your forecasting will always play an extremely important role in determining how efficient and cost effective your inventory management is. Forecasting doesn’t simply mean making things up as you go along or acting on impulse, but instead carrying out as much market research as necessary on an on-going basis to ensure you know exactly what you are going to need, when you are going to need it and how much of it you are going to need.