Using inventory systems software to maintain overheads

Any business that carries stock of any sort must have inventory systems, incoporating stock management software, to manage it. Whether you own a small suburban milk bar or a large distribution warehouse, inventory systems software is crucial to sustaining a viable business. 

As David Simmonds, Managing Director of JIWA Financials, puts it: "Inventory management is about knowing precisely what stock you've got, where it is and how valuable it is."

Inventory systems in practice

One key premise of organising and controlling your inventory is to only have items on your books that bring benefits to your business. Any item that doesn't improve cash flow should be offloaded and replaced with something that does. 

That means assessing the value of your stock and the benefit of your business carrying it. Inventory systems software is critical to this process.

Identifying 'dog stock'

Most inventory systems software is able to produce reports that rank your stock by the number of times each item is sold, or has a 'hit'. These 'ABC' reports identify the most popular - and therefore valuable - products. 

'A' products are the most popular; 'B' the next tier, and so on. Once you get to products classified as 'D', they represent less than 1% of your income. And 'X' refers to those items that don't sell at all. This 'D' and 'X' stock is often referred to as 'dog stock'. 

"The data produced by your inventory systems software and ABC report indicates the stock you really need to have a good look at and decide whether to get rid of or not," says David.

Dog stock can be offloaded by: 

• reducing its price
• returning it to the supplier
• offering incentives to sales staff to sell it
• donating it to someone.

Benefits of good inventory systems software

• You will only stock items of value to your business.
• You will reduce overheads, i.e. not be paying to stock useless items.
• You can organise and control your remaining stock.
• You can place your stock where it is more likely to be sold, or where it can easily be found by your staff.
• You will always know where your stock is and how much it is worth.

Your house in order

Only once you've assessed whether your business should carry a particular item can you effectively order your stock to increase your chances of generating income for your business. That is, place it within your shop, salesroom or warehouse so it can be seen by customers and sold, or located by your staff to fill orders. 

This can only be good for your business.

So talk to an inventory systems consultant today and find out how you can organise your stock and get your business moving forward in leaps and bounds.