How to Efficiently Manage Inventory: Six Most Important Rules

It is important to keep an accurate eye on inventory so that the number of items in store is always perfect. It not only helps you to manage better but it also allows you to be in control. Having inaccurate data can result in inventory management breakdowns.

It may sound a bit too traditional but knowing the numbers is a critical aspect of inventory management. Knowing the exact number of items lets you manage inventory efficiently and accurately. If you have no idea of the exact stock, you will be prone to make assumptions rather than informed decisions. That’s why it is always important to know the accurate number of items in order to manage damages, slow-moving products, and theft etc. When it comes to inventory, it’s always a numbers’ game.

  1. Keep an eye on the status of items

As an efficient store manager would tell you, keeping an account for stock for items in different locations or for the items that are in consignment is always important to control inventory effectively. As is obvious, knowing the status of items would help you take effective and cost-saving inventory decisions. So, make it a habit to keep the status of items updated.

  1. Organize the inventory

Now, when you want to know the status of stock, you could face problems if you don’t organize the stock. According to an analyst, retailers should always label and arrange shelves in a systematic manner so that the counts can be made accurately. If the stock is randomly managed, there will always be a chance of error in forecasts. That can turn out to be costly.

  1. Keep all tools handy

In the 21st century, you cannot be a victim of the technology crunch. Whether it is a handheld, or spreadsheets, keep all tools arranged for better inventory management. Technology can streamline your counts and let your retail store run smoothly, without having to stumble upon for insufficient or over-estimated stock.

  1. Stay updated regarding counts

Not having real-time updates about the exact physical count can turn out to be expensive. Always keep a note of variances and discrepancies while cross-checking the counts against the most recent accounting records. Having no idea of latest records can disrupt your inventory management goals.

  1. Never allow interference during counts

Do not allow too much conversation between workers in your store as inaccurate counts can lead to an imbalance in inventory management. If possible, disallow the use of cell-phones by workers in the store.

  1. Do NOT estimate

Never take a count depending on averages. Always, count every single item while opening the item boxes. Train your staff to be detailed and systematic to have an accurate count while stocking items. Estimation without detailed counts can lead to serious breakdowns in the overall inventory management process.

Endnote

It is important to keep the flow of inventory smooth if you want to establish a productive and systematic growth in profitability and increase sales efficiency. That requires a lot of dedication and skills in keeping the numbers updated in real-time; all the time your inventory is moving in and out. That’s what your exact business is.

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INVENTORY AUDIT- IMPORTANCE AND PROCEDURES

What is an Inventory Audit?

Stock review additionally alluded to as stock review, alludes to a bookkeeping procedure which considers an organization’s aggregate supply of physical merchandise. This is particularly required in assembling organizations where crude materials should be changed over to completed merchandise and is a quintessential procedure of keeping up a sound business and for it to succeed. Stock review is viewed as compulsory for keeping record of the amount and nature of crude materials staying in stock. This is on the grounds that much else besides 70% of item cost includes material cost. Moreover, stock review is totally fundamental for associations with various branches as they have a tendency to have an enormous load of physical products. Review of fundamental physical inventories is for the most part directed at or close to the finish of the year.

 

Significance of Inventory Audit

Stock has a tendency to be the most effortless advantages for control and thus it’s fundamental to keep a steady vigil over it. Here are a few reasons why stock review is viewed as central:

 

  • Inventory review is additionally required to coordinate the real amount of things in stock against the bookkeeping records while likewise modifying for contrasts and taking into consideration shrinkage with the goal that the record reflects exact esteems.

 

  • Inventory review will have the capacity to uncover which physical merchandise or items are finished or under-supplied. This will enable you to legitimately and viably stock your business therefore amplifying benefit.

 

  • Inventory review is important to decrease superfluous speculation on stocks and to guarantee that you have an appropriate line adjusting simultaneously.

 

  • Inventory review is expected to analyze real physical tallies and match it to business records: When this number is directed precisely, a stock review will have the capacity to unveil the genuine picture of what you really hold when contrasted with the recorded stocks which, thusly, will give you a comprehension of the monetary wellbeing of the organization. Error of stock adjusts regularly has a tendency to directly affect announced benefit.

 

  • Inventory review is basic to represent any kind of stock misfortunes coming about because of, wastage, pilferage, harm, oldness, and torpid stock.

 

  • A stock review will likewise help decide the viability of your distribution center systems and help uncover any issues inside your association’s stockroom methodology, regardless of whether it is at the getting dock or amid the genuine bundling. This could help in featuring any potential wasteful aspects in the process, for example, confusion of the stockroom and moderate recovering techniques.

 

  • Inventory review will assist uncover any disappointment attributable to absence of security which brings about misfortune, burglary or misappropriation.

 

  • High levels of stock by and large outcome in pointless overloading consequently bringing about poor money streams and monetary misfortune. A stock review at auspicious interims will help cure that issue. Correspondingly, it helps in deciding any outdated stock in stock or requests mistakenly provided to clients which couldn’t just prompt budgetary misfortune yet in addition result in a hopeless harm to the association’s notoriety.

 

Techniques of Inventory Audit

Grasping the significance of stock review is a large portion of the fight won; to genuinely understand your stock review objectives, you have to enroll the administrations of an expert to really comprehend what’s working and what’s not working and guarantee your in-store operations are proficient. Considering how tremendous inventories have a tendency to be, evaluators may direct a few stock review strategies before they close down that the valuation you have expressed for the stock resource is sensible.

Basically, there are two techniques for completing stock tallies:

 

  1. Periodical Analysis which is typically led at or near the year end.
  2. Ceaseless Analysis which includes depending on a nonstop premise over the entire year.

 

  • In this methodology, each and every thing is physically examined at any rate once per year, and all the more much of the time on account of things obligated to misfortune.

 

  • Accurate up and coming records are kept up.

 

  • Thereafter, the records are corrected and marked because of the physical review. This is done to find out that there are suitable reports and examination systems set up to represent any disparities.

Here are a portion of the stock review methods that the inspector may take after:

 

  • Cut-off examination.
  • Observing the physical stock number.
  • Reconciling the stock tally to the general record.
  • Testing high-esteem things.
  • Testing mistake inclined things.
  • Testing stock in travel.
  • Testing and coordinating thing costs for exact stock valuation.
  • Reviewing cargo costs.
  • Testing for lower of cost or market.
  • Accurate investigation of completed products costs.
  • Direct work cost investigation and coordinating with finance records.
  • Overhead investigation.
  • Work-in-process testing.
  • Inventory stipends for out of date stock or scrap.
  • Inventory responsibility for really possessed by the organization.
  • Testing the Inventory layers to decide whether you are utilizing a FIFO or LIFO stock valuation