Are there hidden inefficiencies in your inventory strategy? Are you missing opportunities to meet consumer demand or save your business money?
We tend to pay attention to what we buy as inventory, but when it comes to how we buy and manage those goods, then we can be less analytical and strategic. In this article, we’ll look at the numerous ways SMBs can improve their inventory strategy — and the benefits they’ll experience as a result.
5 ways to improve your inventory and buying strategy
1. Audit your current inventory strategy
Before you can plan to improve, you need to know how you’re performing today. Take a close look at your current inventory strategy to see what could be working better.
Are you buying the same quantity of goods all year round, despite a seasonal demand? Are you overspending in general and ending up with deadstock? An audit will give you a better idea of the necessary changes; it’s about understanding where you are today and where you’d like to be in the future.
2. Try a different buying rhythm
Armed with your audit insights, it’s time to try out new approaches.
The first change you can make is to your current buying rhythm:
- Order pattern method – Here, a business makes regular, fixed inventory orders of the same amount. This makes sense for items with year-round appeal but could be a source of wasted spending for clothing companies, for example.
- Control rhythm method – This requires businesses to monitor demand, ordering inventory at the right time, and to the right quantity, based on this data.
- Reorder point method – If you have a good handle on your omnichannel inventory management, then you’ll know when items fall below a certain volume in stock. SMBs using the reorder method to inventory buying will only restock items once this level is reached.
Adapting your buying rhythm can ultimately save your business money — there’s no point paying to store items that aren’t going to sell yet. This is of course particularly important for brands selling perishable goods.
3. Try a different buying strategy
Next, you may want to consider a new buying strategy. There are a number of strategies out there, many of which you may already be familiar with. With the internet increasing demand for products as well as businesses sharing innovative strategies, you have plenty of new ideas to choose from.
Dropshipping, for example, is a buying strategy that does away with the need to store items in inventory altogether. Instead, the business orders or manufactures the products as they’re purchased by the customer. This can reduce or even eliminate your storage costs.
Another option is bulk buying, which runs counter to dropshipping. This allows you to buy in-demand products for a reduced price. Just be sure that you only stick to this strategy if you’re sure that the product is going to sell!
4. Use software for smarter inventory management
Inventory software can be game-changing for SMBs — especially if you’ve been using Excel spreadsheets to date.
Digitising your inventory strategy brings improvements in all aspects of the workflow:
Monitoring current stock levels
Having a real-time view of your current stock levels helps you avoid overbuying or running out of certain items. Inventory software provides at-a-glance updates and saves you manually updating the spreadsheet!
Calculating hidden buying costs
When you’re deciding how much to buy, be sure to factor in the costs of carrying and storing the inventory. If it’s too expensive to store, you may need to rethink your quantities.
Inventory costs can be easy to overlook in the moment, then months later it’ll hit you that you’ve been spending far more on storage than you’re used to. Or you’ll run out of critical storage, weakening your ability to respond to demands and otherwise remain agile.
Again, software can help visualise your storage levels and costs in real time, expediting the process of deciding how to adjust your storage to better match your needs and goals.
Trying to predict the future can be challenging, but it’s important to have an idea of what your future needs and demands may be. This will help you know when to buy certain items so you’re not left without them when demand increases.
This is especially important in a manufacturing landscape that’s rife with disruptions. Improving your forecasting, generally by investing in innovative software solutions, will help you better weather incoming disruptions and demands.
And remember, knowing when to buy also means knowing when not to buy. Getting ahead of trends, not behind them, is key, as is avoiding deadstock and disruptions. It’s a balancing act that takes time, understanding, and plenty of tools to support you.
Implementing automation where possible
Automating your inventory buying process can help you save time and become more efficient.
This is where software can be a true lifesaver, so look for ways to automate wherever you can. You can automatically purchase inventory, get notifications on your stocking levels and the status of your supply chain orders, and much more.
Leveraging automation in this way will empower your SMB to be faster, more productive, more cost-effective, and otherwise improve your inventory strategy.
5. Consider other applications for inventory technology
Once you’re comfortable having upgraded from spreadsheets to inventory software, you can then look to other new technologies to improve your inventory strategy.
RFID (Radio-frequency identification) tags, for example, can boost your inventory management accuracy using the power of IoT. Compared to barcode scanning, RFID tags don’t require a line of sight and they’re easier to automate — this means you can implement them in more situations than traditional barcode scanning.
Embracing technology like this can make it much easier to move to a reorder point inventory buying method if that makes sense for your business.
Take your inventory buying strategy to the next level with Workhorse
The improvements we’ve listed in this guide may feel like big changes to your inventory strategy. But Workhorse’s inventory management software was designed to help businesses like yours — we can help you improve your inventory strategy, automate your workflows, and bring together valuable integrations.
Ours is a customisable solution that works the way you do. Book a demo today.