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Imagine you are on a boat that is about to sink. You have a life jacket, but you also have many valuable items you don’t want to lose. What do you do? Do you try to save everything or prioritize what is most important and leave the rest behind?

Many implications are centred around inventory if your business produces or assembles products or sells physical goods. Not only are there warehouse space considerations, but there are financial considerations, too, of keeping enough raw materials or parts in-house to keep the production lines moving and maintaining high enough stock levels of finished products to meet customers’ needs. 

Whether it’s raw materials, parts or finished products that you’re holding in the warehouse, full shelves can mean an empty bank account. It’s important to review your stock systems to ensure your process is optimised and your spare cash isn’t all tied up in the warehouse.

1. How much do you order at a time? While ordering in bulk can save money, it also ties up the cash: you should only order what’s needed to produce what you know you can sell.
2. Do you place orders automatically without checking actual stock levels? Rather than having a standard ordering schedule, it may be better to work with a just-in-time stock policy to ensure you only order lines that customers want and supplies you will use.
3. Use technology to manage stock reordering and slow-moving items better. The latest stock control systems use machine learning capabilities to manage your stock, measure your waste, and forecast your needs.
4. Wastage occurs in many ways and needs to be carefully controlled. If your materials or products are perishable, you must be careful about controlling stock levels. But even non-perishables can become unusable through being left too long in warehouse conditions or because standards change, and they are no longer compliant. They also occupy space, which has an associated cost.
5. Ensure stock control processes are supported with simple documentation and communicate clearly with your team so everyone understands what is expected of them. Potential efficiencies may have been missed, so do encourage feedback and suggestions.

Here we’ve talked about businesses that make physical products, and if you are a service provider, you may feel this isn’t very relevant to you. But take a step back and consider how similar problems arise if you have a build-up of work-in-progress that is yet to be billed or if you invest too much time in unpaid meetings and presentations before the project is confirmed and the contract signed.

We work with manufacturers and service providers, so we understand your problems. If you’re having trouble balancing your inventory process or other aspects of running your business, get in touch for a chat, contact Julia at julia@leaskas.co.uk