Inventory control does more than keep your warehouse organized. It can actually save your business money. Here’s how.
Analyze Trends
Businesses should record when sales spike during certain holidays and seasons. Doing this will help you forecast sales for those items in the future. When analyzing these spikes, take note of marketing methods being implemented during that time, current events, and other factors. Figuring out the reason why sales went up will help you deduce whether or not it will happen again.
Make Predictions
By studying your consumers’ trends, you’ll be able to predict which of your items will and won’t sell throughout the year, meaning can predict how much stock to keep on hold. To do this, your business must not only track sales monthly, but check the forecasting algorithm quarterly to measure how actual sales turned out compared to your predictions.
Reorder Efficiently
To ensure you always reorder more stock at the right time, calculate your PAR level, or Periodic Automatic Replenishment. Your PAR level is the lowest amount of stock you should ever reach before ordering more, ensuring that you neither have too much stock at one time nor risk selling out.
Lead Time x Expected Sales Per Period = PAR Level
Calculate Accurately
Figure out the real cost of your inventory. This includes the price of the products you’re ordering, the related costs of receiving it (freight), storing it (warehousing), marketing it, delivering it, and external factors such as dead stock, inventory damage, or loss. Once you’ve calculated the cost of obtaining a product, you’ll use this formula:
Total Sales Per Product – Total Costs of Product = Actual Profit
Does your business need warehousing solutions? American Western Distribution’s provides inventory control among other services for your warehouse. Contact us today.
