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Juggling the supply of your inventory with demand as you monitor constant changes in both is a tricky task. You don’t want to have too little in your stock when customers want a certain item. They might turn to a competitor for a similar product, and you’ll lose a potential sale. At the same time, you also don’t want so much of a product that you are unable to sell it all and lose the capital you invested in it. In light of this, we have gathered together some approaches on how to save money on inventory that you can apply to your business.
Prioritize Older Inventory First
The longer that products sit in your warehouse, the more they can lose their initial value. Over time, they may show more visible signs of deterioration and have more chances to become damaged. When new products come in that essentially fulfill the same function, but better, people are not going to want to buy the older product as much. You’ll need to drastically reduce their selling prices just to sell them. Hence, it is wise to prioritize selling older inventory first before newer items. Place those products that have been in the warehouse longer up front where you won’t forget about them.
Communicate Well with Suppliers
When you work with suppliers, it is important to establish clear communication so that both of you can adjust your operations to meet the needs of customers most efficiently. You should tell them early on when you can see that a certain item is selling quickly and expect it to continue doing so. They can then work to increase the output of that item. Similarly, having strong communication will also mean that the supplier can easily inform you of holdups on their end so that you can modify how you market to the customers. In both cases, you’ll save money by avoiding the communication delays that cause misalignment with customers. By remaining on your toes with supply and demand, you can adjust your inventory to match how much you require at any given time, meaning you won’t spend more than you need to.
Plan Warehouse Space Organization
As was mentioned in the prioritizing older inventory section, how you organize a warehouse can have a dramatic effect on your management of inventory. You can hire a professional to help you plan your warehouse layout in a way that will be most intuitive for you and your workers to use. As you go through this process, you can have different categories of items arranged to maximize the speed of processing and to highlight the high-priority inventory that you need to sell. The improvement in efficiency and order will mean that you are less likely to lose money by way of wasted time or misplaced items.