Inventory is an expensive but essential business commodity. Whether you’re a bar, salon, retailer, or garage, there are items you just can’t operate without.
However, just because they’re a necessity, doesn’t mean you have to be content with the cost. If you’re smart about the way you order, store, and use your stock, you can save a significant amount of money for your business every year.
Choose An Inventory Management System That Works for You
First-in, First-out (FIFO)
The first in, first-out method basically means that the first stock you order is the first to be sold. This is an extremely logical method for business owners, and means that they’ll never come a time when things have reached their sell-by-date and still not been sold.
Some items you think will last for over 12 months are still likely to become unsellable after a while, such as cosmetics and hair products, that’s why it is worthwhile always sticking to this system. The key to successful FIFO is a really efficient storage space, where your short life products are accessible, not buried at the back of a shelf.
A ‘lean’ system popularised by Toyota, where inventory is only ordered as it’s needed. The business doesn’t store stock ‘just in case’ or in advance, lowering storage costs and reducing the chance of wasting stock.
This method is great for businesses who don’t have a lot of spare space to hold products and parts.
For businesses involved in manufacturing, inventory can be ordered as raw materials, basic parts, partially assembled, or finished goods. The costs will vary, so it’s important for businesses to weigh up which is more cost-effective when staffing, resources and energy costs are included.
Don’t be Afraid to Change Suppliers
Some business owners fear changing essential parts of their operations, just in case something goes wrong and they lose business. When it comes to stock costs, you can’t afford to take this attitude. If a supplier is too expensive, it’s time to talk your way to a better deal.
The more you order from them, the more leverage you’re likely to have. Many suppliers and wholesalers would rather be flexible with a regular customer than lose them, so as long as you’re reasonable and reliable, you should get the deal you want.
Forecast Demand and Seasonal Changes
The longer you’ve been in business, the more familiar you’ll be with the peaks and troughs of your industry. If you’re prepared, you’ll have more time to shop around and find competitively priced stock for seasonal events. You can also order more or less depending on how demand changes in general.
Capify Can Help You Purchase More
One of the most popular reasons that people get business finance from Capify is to purchase extra stock. Sometimes, at particularly busy times of the year, owners need to place very large orders. Other times, a deal comes on which is too good to miss. If you’d like to raise between £3,500 – £500,000 for your business, get a quote today.Get A Quote