Being an entrepreneur, you are aware of the need to effectively evaluate your business at regular intervals. This is to ensure your establishment is moving in the right direction when it comes to accomplishing its organizational goals. One important aspect of this process is proper inventory management. It is important for you to keep adequate stocks in your business premises at any point of time to meet the needs of your customers. However, overstocking of unnecessary products can extend order fulfillment. This could adversely affect your cashflow position. In such a situation, you are likely to find an increase in your operating costs and cash moving out of your business.
Alton Ingram – Effective measures to ensure inventory management
Alton Ingram is a popular plastic surgeon from Nashville, Tennessee with reputation of providing exemplary services to his clients. He specializes in the field of reconstructive surgery and has valuable years on experience under his belt in this branch of medical science. He is currently a prominent member of the American Medical Association but is known for his association in a number of charitable organizations. These include ‘Doctors Without Borders’, ‘Habitat for Humanity’ and ‘Operation Smile’. He points out that entrepreneurs should adopt the following 4 techniques to effectively manage their organization’s inventory:
- Adopt the FIFO (first in, first out) stock management approach
You should try to sell the products your organization deals in a proper chronological order. Your objective is to disposal of the products you brought from suppliers at an earlier date first before moving on to later purchases. This is necessary if you are a retailer in perishable commodities such as food items, flowers and cosmetics.
- Identify slow-selling inventory
If you have certain products in your inventory which you have been unable to sell for more than 12 months, it is prudent on you part to stop stocking such items. However, in the unfortunate situation, where you still have such products, you could consider offering special discounts to your clients to dispose of them as fast as possible.
- Conduct regular stock audits
Your organization may employ the best software system to manage the stock it holds in its premises. However, even this technology is no substitute for physical stock taking. You still need to take effective steps to count the products you have in your organization and ensure that this figure tally with what your books of accounts show.
- Quality control
You need to ensure products your organization deal in and stores in its premises are of the highest quality. Otherwise, you may find it difficult to sell them to your customers in the marketplace. While carrying out an effective stock audit, you should instruct your staff to make sure the labelling of such items is correct. They should identify any signs which could seriously affect the quality of these goods.
Alton Ingram says the above 4 techniques can help to effectively control and manage the inventory your organization keeps within its premises. It can go a long way in helping you keeping the costs relating to insurance, storage and carrying such stock to a minimum. This can help to improve your organization’s cashflow position.