Some economists are predicting a mild recession in 2022 in the United States as consumer spending slows in response to inflation. As a product-based business owner, you need strategies to help you weather any recession. By leveraging technology to manage your inventory, you can survive any challenging situation.
Cin7’s inventory management software is your best bet to automate your business processes and have optimal inventory control.
Right-sized inventory, better cash flow
The less time inventory spends on the shelf or in the warehouse, the more cash you’ll have in the long run. That’s because it costs money to warehouse and manage stock. Consider the cost of employees, utilities, storage and shelf space, along with the depreciation of products that are waiting to move.
Inventory management best practices to increase sales
Cin7’s best software for inventory management, combined with best inventory management practices, will help you boost sales and maximize profits. Start by following these steps.
1. Assess slow-moving stocks
Cin7’s robust inventory management software will help you assess your slow-moving stocks with
- a simplified stocktaking process,
- precise reports, analytics, and data on past sales,
- a platform connecting your stock locations, warehouses, sales channels, orders, reports, etc., and
- streamlined business processes.
In short, the software makes your business more transparent. Thus, you always know what goes in and what comes out. You can always access purchasing reports and sales analytics and make data-driven buying decisions to stock inventory. That way, you can minimize deadstock and maximize your sales.
2. Run a promotion
After you have identified your slow-moving stock, it is important to find ways to increase turnover. The answer is promotions and sales. Who doesn’t like to buy at a reduced price?
Some strategies for increasing sales include:
- Bundle products: You can bundle relevant products and offer them at a discounted price — like a pancake mix, maple syrup, and a special pancake flipping spatula.
- Advertisem*nts: Advertise on your website, social media, and apps. An ad saying 30% off or a two week stock clearance can grab the customer’s attention and move your products off the shelf.
- Offer products at a discount with top sellers: You can pair up your slow-moving stocks with the top sellers at a reduced price.
3. Forecast accurately
The fool-proof strategy for a successful business is putting your data to work for you. Cin7’s software provides sales reports and analytics so you can make predictions about what your inventory will look like in the coming months. Thus, you can stock fast-moving products and prevent deadstock.
Here are a few tips for forecasting the market trends:
- Go by data and not instincts. Constantly assess real-time insights and data before making business decisions.
- Define your goals. It can be anything from improved sales, increased profits, website traffic, and customer retention to customer acquisition. With clear-cut goals, you can better analyze and foresee the market.
- Do competitor analysis. Analyze their products, online presence, and marketing gimmicks and identify your areas for improvement.
- Conduct forecast meetings regularly and try to stay abreast with market trends.
4. Source efficiently
Sourcing is a crucial part of any procurement process. It involves screening, analyzing, and finalizing suppliers to buy goods for your organization. Efficient sourcing means identifying and partnering with quality and cost-effective suppliers while maintaining optimum inventory levels with minimum overhead costs.
To source goods efficiently:
- Conduct product research: As a business owner, you must clearly understand your product and how they are produced. Thus, you can identify and procure quality components.
- Find the right suppliers: A supplier provides goods for your business regularly. Do your research and find reputed suppliers who provide prompt deliveries. You can ask for samples and even trial-run an order before partnering with them long term.
- Make a contract: Once you and your supplier agree to the terms, make sure you seal the deal by signing a contract. A written contract is a legal document which covers the quality of goods, the length of the agreement, payment terms, and actions in case of negligence or breach.
- Outsource: If sourcing goods sounds overwhelming, you can outsource to a third party who will choose quality goods for your business.
Perils of poor inventory management
No matter what or how you sell, bad inventory management can hurt your cash flow and negatively impact your bottom line. Poor inventory management can have significant consequences including:
- Higher holding costs. The longer you hold inventory, the higher your costs. Thus, without good inventory management and information, you may stock up on too much of a product, erode cash flow, and risk holding dead stock that has become obsolete.
- Missed sales. While holding too much stock carries risk, having too little stock means losing sales. If you rely on static inventory tracking, you won’t have data on hand to know a product is selling better than expected. Real-time data and reports help companies see when it’s time to replenish or increase stock levels of hot-selling items.
- Uncertain cash flow. Without good inventory management, you may be far from optimum inventory levels, tying up cash in the short term, making it more difficult to meet other expenses and short-term debt obligations.
- Too much real estate. With too much inventory, you’ll need more space to house it. Carrying the right amount of inventory reduces the need to own or lease excess space. Good inventory management means optimizing retail space and economizing warehouse space.
Wrapping up
Good inventory management is a key to weathering uncertain economic conditions.
With Cin7 inventory management software, you can implement best inventory management practices to thrive even when times are tough. Book a demo with us if you want to know how Cin7 can benefit your business.
