Author: Robert Lockard
Small businesses don’t have an unlimited amount of money to work with. The smaller the business, the more precious every dollar is because there are so few of them to go around compared to large corporations. It’s a good idea to keep as much money in your pocket as possible for a rainy day instead of having too much of it tied up in inventory. Here are three ways to do that.
Reduce Carrying Costs
The most obvious way that you can free up funds in your inventory is by reducing the number of items you have in the warehouse. You can accomplish this by setting up automatic reorder levels on your parts and products so you only obtain more when absolutely necessary, and you don’t order higher quantities than you need to meet your needs. This helps you save money in a number of ways because you are less likely wind up with a lot of money stuck in slow-moving inventory instead of being devoted to other areas of your business that could produce a higher return. We’ll elaborate on that in the next section.
Make the Most of Storage Space
You’ve got a finite amount of space in the warehouse. You’ll want to make the most of it so you don’t run out of room and have to rent extra space. Studying sales trends can allow you to find which items are in higher demand at certain times of the year. Then you can stock up on those items while reducing your stock of items that are not in such high demand. This will let you reach a healthy equilibrium that fluctuates over time. You can also see which products are often sold in tandem, which can help you restructure your warehouse to put those items close together on the shelves to save time picking orders. And that brings us to the third point.
Allow Employees to Do More
Your inventory costs don’t just include the things in your warehouse, but also the people. If you can reduce the number of warehouse workers it takes to perform daily tasks of receiving and fulfilling orders, you can put those excess employees to work on other possibly more lucrative tasks. With the aid of mobile devices or printed pick tickets, warehouse workers can perform batch picks, which involve picking items for several orders at the same time. That way, your employees don’t have to go back and forth, revisiting the same shelves over and over to pick items for multiple orders one at a time.