Stock Control & Inventory Management Tips

Retail businesses of all sizes suffer from ‘shrinkage’, a loss of inventory which could be attributed to a variety of factors, including employee theft, shoplifting and staff or warehouse errors. 

Whilst we’re focused primarily on the latter, it is important to note that when you are trying to grow your business from a relatively small base, attention to your stock levels and how you manage your inventory not only affects your ability to grow, in terms of your profit or loss, but also in customer satisfaction.

If you don’t currently outsource your order fulfilment process, here are some simple inventory management tips to help you reduce shrinkage in your business:

10 Top Tips on Inventory Management 

1. Check all stock inwards
   The first focus should always be to check what actually gets delivered against what you have ordered from your supplier. It is easy to assume that the numbers match up, but from talking to our customers we note that a good 1% to 2% of stock orders are incorrectly packed. If you just assume that you have the correct amounts, you could end up paying for stock you haven’t had and being short stocked when you receive a customer order.
2. Store your stock wisely
   If you have similar products with similar packaging, storing them all together is likely to cause errors during the picking process. Try and keep these items separate and clearly label shelves and storage areas.
3. Name your products clearly
   If you stock products in different sizes, make sure that any order form you get through your system makes it absolutely clear which size to pack. If you need to alter your packing slips to make it totally clear, then do so. You may even want to colour code these slips and match them to a colour label on the individual product packages.
4. Keep control of best before dates
   If you offer products with a shelf life, you are liable to hefty fines if you ship out of date products to customers. Create a reminder system for each product line, so you know when an item should be reduced in price. If you set the reminder before this date it will give you a chance to shift the stock at full price first. It’s also important to check best before dates as you pack each order. Often you will have multiple batches in stock, so don’t assume all the dates are the same.
5. Don’t compound problems
   If you send a customer the wrong product, when you send out another make sure you amend the stock levels of the relevant product. It seems obvious to state, but this can be easily overlooked when you’re busy. 
6. Set a minimum stock level
   Each supplier will have different lead times so to avoid being out of stock you will need to establish how long it normally takes to restock and how long it normally takes for that minimum stock level to run out. This calculation is confused by the issue of some lines being in greater demand than others, but you’ll need to restock the less popular items at the same time to take advantage of the lower transport cost per unit. Ideally, always have a buffer for your minimum stock levels to help you fulfil a certain number of unexpected orders.
7. Think about the Wilson EOQ Model
   This is a formula devised by Ford W. Harrison but applied by R. H. Wilson extensively to determine the optimal order size for a given unit of inventory. You can use this website to help you work it out and you can find a more detailed explanation here.
8. Consider an automated solution
   Our order fulfilment solution is computer operated and is based on barcodes to minimise the picking error rate to almost nothing.
9. Manage returns effectively
   One of the biggest issues for many retailers, certainly in the fashion and electronics markets, is the correct handling of returns. If you do have to restock an unwanted item, make sure all your usual labelling systems are still in place. If you do have any stock returned because it is defective, make sure you account for it with your suppliers.
10. Regular stock checks
    The obvious solution to accurate inventory control is to carry out regular stock checks. If you have made errors, it is better to spot them before you take a customer’s order. Even if you don’t have time to check your entire stock frequently, ensure you at least rotate your stock, checking and reviewing the stock levels of a different manufacturer on a regular basis.

There are often many small changes you can make to your inventory management, picking, packing and shipping processes that can have significant impacts on the efficiency and productivity of your business. Take a step back, analyse your order and fulfilment processes and establish if anything can be improved to minimise fulfilment errors. Doing so can have a noticeable impact on your bottom line and allow you to grow faster.

If you’d like to talk to us about outsourcing your inventory management and order fulfilment, please get in touch, we’d be happy to discuss your requirements, or get an order fulfilment estimate using our fulfilment cost calculator.