Warehouse management is a very hard job for shop owners and storekeepers. As stores and businesses grow, the number of goods in the warehouse is also increasing.
How to manage the warehouse so that the goods sold and imported are not confused or lost? Here are the effective warehouse management methods synthesized by Sapo Blog, which will help you manage your inventory more closely and effectively in your business.
How to effectively manage inventory in retail
1. What is warehouse management?
1.1. The concept of inventory
Before we want to understand what is inventory management we need to know the concept of inventory.
Inventories are all resources that are kept in reserve to meet current or future needs. Inventory management includes not only finished product inventory, but also work-in-progress inventory, raw materials/components inventory, and tools and tools inventory used in production…
Too much or too little inventory affects the production and business process, so it is necessary to have appropriate inventory management methods.
1.2. So what is inventory management?
Warehouse management is the control of daily warehouse operations such as import - export - inventory, warehouse transfer, etc. Effective warehouse management helps to reduce costs and increase revenue for stores and businesses.
Currently, small shops can manage import and export inventory with Excel files because the number of products is not much. But when scaling up, the number of goods is up to thousands or there are many different warehouses, business units need to use sửwarehouse management software to shorten time, save resources and costs. and increase management efficiency.
Good warehouse management helps to reduce costs for stores and businesses
1.3. What is inventory management?
Inventory management is a part of supply chain management whose main purpose is to ensure the quantity of products for sale at all times. Ensuring this process is the most important factor to optimize sales and save costs of handling hard-to-sell inventory.
Along with that, warehouse management also includes controlling every product from hot selling to unsold surplus to make timely plans, free up warehouse space, save costs and ensure the best efficiency. .
Most people are very afraid of the word “inventory”. Because the goods in the warehouse are many, if you do not know how to manage inventory scientifically, it is easy to encounter mistakes in warehouse management.
There is a simple inventory management method that reduces the cost of inventory management as well as simplifies the control of the remaining quantity in the warehouse.
2. Why do you need inventory management?
In a business, inventory is always one of the most valuable assets out of the total asset value of that business. Typically, the value of inventory accounts for 40% - 50% of the total asset value of a business.
Therefore, good control of inventory is always a very necessary and essential issue in operational production management.
Inventory is the bridge between production and consumption. Every salesperson wants to raise inventory levels to quickly respond to customer needs;
However, for the finance department, it is always desirable to keep the inventory to a minimum, because the money in the inventory will not be spent on other items.
Therefore, inventory control is an indispensable strict inventory management principle, through which businesses can keep inventory at a "just enough" level. It means not "too much" but also not "too little". The task of inventory management is to answer two questions:
How much inventory is optimal?
When to place an order?
2.1. Avoid loss of goods
The phenomenon of goods loss occurs due to many reasons, it can be caused by employee fraud, loss in the warehouse, or loss due to price slippage.
Employee fraud is quite common in many stores. The fact that employees "get used to" many times not only causes other employees to suffer unjustly, the store culture goes down, but also causes damage to the store owner. Therefore, the strict, transparent and scientific management of the warehouse will minimize the "manipulation" of warehouse staff and sales staff.
In addition to the losses due to price slippage, for many retail stores of technology goods such as electronics, household appliances, etc., goods are quickly "outdated", replaced and slipped in price. Although often backed by the supplier with the best price, the store's profit is still greatly affected by price slippage.
Therefore, regularly checking and comparing the amount of goods sold and the amount of inventory will help the store avoid significant losses and plan to import goods accordingly.
See more: How to effectively manage goods to help prevent loss for shop owners
2.2. Cost savings
Save cost of raw materials, supplies
Goods/materials in stock for a long time, damaged, worn out, expired, etc., must be destroyed because they cannot meet business needs. However, if the inventory of supplies is kept close and constant, and the budget is closely estimated, the store will avoid unnecessary waste.
Good warehouse management will reduce inventory costs
Save on storage costs
The storage fee is usually not fixed but it depends on the quantity and size of goods that you store. The larger the inventory, or the products are too bulky, the store has to use a lot of storage equipment and other costs such as electricity, water, labor, etc., the storage costs will increase.
Therefore, it is necessary to detect goods with large inventory early, which consume a lot of storage costs, to take measures to release and transfer inventory in time, saving a lot of storage costs. necessary.
Save on purchasing costs
Large inventory is something that no store owner wants. If capital is not profitable, then capital is "dead". Large inventories cause a large amount of capital to be misused, wasted, or even thrown away.
For supermarkets/appliance stores/clothes shops, which import a lot of products that are difficult to sell, unpopular with customers, and easily out of fashion, the possibility of selling at a loss or leaving is very large.
For restaurants/cafes/restaurants, inventory management is an extremely necessary job. Good warehouse management makes it easy for restaurants to determine the daily cost of incoming goods, determine the amount of fresh ingredients for short-term use and dry/frozen ingredients to store, the shelf life of ingredients in stock, which ingredients Expiration soon…
2.3. Increase sales for the store
The problem of raw materials and goods of stores is that if they are too much, they will be wasted, but if they lack them, they will lose revenue, affecting sales productivity, losing customers, and making the store unprofessional.
One of the effective ways to manage inventory is to check inventory regularly to help you quickly know which items are selling well so that you can plan to import goods in time or offer promotions with low or high inventories. . Thus, the store will optimize sales and profits.
Good warehouse management will help increase sales of stores and businesses
2.4. Increase working capital efficiency
What is working capital?
Working capital is the cash flow to maintain the business and reinvest the stores in the short term. Working capital comes from the store's own capital and revenue, spent for the purpose of importing goods, importing materials for 1 month or 1 quarter. Lack of working capital, the store will be "immobilized" because there is no money to continue the business.
Goods in stock – Includes products and materials in stock as an element of working capital. If the goods in the warehouse are well circulated, it will reduce the amount of working capital for 1 month, 1 quarter and shorten the capital turnover time. As follows:
Estimated working capital is tight
This makes a lot of sense for many stores with low financial budgets.
Reporting the number of goods in stock by week, day, and hour, will help managers easily orientate the timely import of goods, thereby adjusting working capital flow.
Instead of having to make a capital budget for 1 month / 1 quarter, store owners can forecast more closely by fully exploiting cash inflows.
Shorten working capital turnover time
Working capital turnover time is the time to rotate a certain amount of working capital to ensure the normal operation of the store. Instead of having to financially plan for purchases in a quarter, the manager can shorten the time and the amount of working capital to 1 month or 2 months.
This requires the manager to know the level of sales, inventory status, what types of goods in stock have stable suppliers (in terms of price, quality and quantity). Obviously, proactive warehouse management will reduce the pressure on working capital.
3. Things to do when managing a warehouse
3.1 Arrangement of goods and materials in the warehouse
Organize the goods and materials in the warehouse in a scientific way.
Building and optimizing warehouse diagrams.
3.2 Ensure all regulations and standards of goods in stock
Arrange all goods in the warehouse strictly according to the manufacturer's instructions.
Goods with short shelf life should be managed according to the first-in, first-out principle.
3.3 Implement import - export procedures
Develop a process to receive, check documents as well as documents and documents required to import, export and circulate goods.
Record and store all export and import invoices.
Monitor and periodically inventory inventory to accurately compare with system inventory.
3.4 Minimum inventory tracking
Monitor the amount of goods and inventory every day, ensure that the goods and materials are at the minimum inventory level.
Evaluate and adjust minimum inventory levels based on fluctuations of each type of goods.
3.5 Ensure regulations on fire prevention and safety
Ensure absolute fire prevention rules in the warehouse.
Always make sure to periodically check the warehouse infrastructure to avoid moisture, termites, and damage that affect product quality.