Ways to Save Money on Inventory Management

One of the most overlooked areas in any business is inventory. Not that companies don’t care about inventory, but they don’t spend nearly enough time managing inventory like they should, and their bottom-line suffers for it. So in an effort to relieve some headache, here are some ways to save money on inventory management.

View your inventory as potential money.

You run a successful business and have acquired inventory. You need to view that inventory the same as money. You wouldn’t be fine for a couple thousand dollars to all of the sudden not be accounted for in your bank account. The same attitude needs to be taken with your inventory.

However, it is not money just sitting there, collecting dust. Your inventory costs you money. You eventually are going to get that money back plus your markup, so you need solid inventory management. You must make sure you are up-to-date on your inventory by doing routine audits. Inventory audits do wonders to save money because you will have accurate data.

Don’t store too much inventory.

Unless you already own a huge 700,000 sq. ft. warehouse, you are going to have to pay to keep your inventory some place. Make sure you are utilizing your inventory so that you don’t rack up on warehousing costs.

Warehousing costs are often based on how much inventory you are storing. To avoid unnecessary costs, make sure you are not keeping too much inventory. Also try to get rid of product that isn’t selling so that you don’t end up footing the higher bill.

Sell the oldest stock first.

Have you ever heard of the first-in first-out rule? If you haven’t then here it is: The oldest stock is always sold first. You never sell a product and then give the customer the newest packed shipment. Always look for the oldest available and ship that customer that.

Of course, this does not mean that you ship the customer the wrong item. Here is an example: A customer orders 500 reams of paper. You have 500 reams of paper that have been in your warehouse for 2 weeks. You just got 1000 reams of paper today in your daily delivery. What do you do? You should ship the 500 reams of paper that you have been storing for 2 weeks rather than take from the 1000 reams you just got today.

Why is that? Because this creates an inventory management flow that is easy to coordinate. You don’t want to end up with product that you can’t sell because it is too old.

Establish and maintain good relationships.

A great way to save money on inventory is to establish relationships with your supplier. Honest and open communication is key for any business, and maintaining that with your supplier is no different.

Having a good relationship with your supplier often leads to lower minimum order quantities or reduced pricing for your key inventory items. This can lead to huge savings year after year.

While this is not everything that you can do to save money on inventory management (that would be a whole book!) this will get you started on keeping more of your money in your pocket.

A bonus way to save money is to use a jam-free, eco-friendly paper for your company. To learn how much you could save, click here!