Inventory management is essential in tracking your manufacturing requisition or supplies for your shop. An excellent inventory management system helps you know the number of materials and products received and issued. And before technological advancements stepped in and changed things, people generally relied on manual and periodic inventory systems.
With modern technology in place, businesses’ inventory processes can now be simplified by introducing a perpetual inventory system. You can integrate your point of sale with a perpetual inventory system to track items in your retail shop. Items sold are updated in real-time as well as sales. As a result, you can monitor your warehouse effectively to ensure that you don’t run out of merchandise unaware.
Common Features Of Perpetual Inventory System
Enforcing a perpetual inventory system within your organization can be to your advantage because of the following features:
- Radio Frequency Identification (RFID): One of the technological features that allow you to scan multiple products at once.
- GPS Updates: This aids in the traceability of your inventories, as it helps update the location of your goods in the warehouse. As a result, tracking inventory can be simplified.
- Auditing System: This is an online system that aids in facilitating regular audits to help you deal with errors that might occur in your system.
- Data Storage: Perpetual inventory systems help you keep a history of your stocks. As a result, you can anticipate peak and off-peak seasons and plan your orders accordingly.
- Data Customization: From your perpetual inventory system, you can have a provision for every department to customize their requisition. You can add data templates for custom details.
How To Have An Efficient Perpetual Inventory System
For your business to get the best from a perpetual inventory system, here are some actionable tips worth taking note of:
Categorize Your Inventory Smartly
Best practices in business management require that you sort your goods and products according to their value. Separate items in high demand from those whose purchase rate is slow in your inventory. For efficiency in your processes, consider sorting your stocks as follows:
- Put aside fast-moving stock that needs quality surveys and constant reordering.
- Have a category for medium-valued stock that needs a once per month reordering.
- Sort products with the least demand and require negligible renewable
Optimize Your Internal Processes
With optimized processes in your warehouse, you can achieve accelerated and more efficient check-in and check-out activities. In addition, you can increase the number of orders that you can handle and process within your working hours. Moreover, you may consider sorting your inventory by positioning your fast-selling stock close to your packing station.
To improve your business earnings, you may need to do more than boost your sales. One of the things that might be limiting your profits is stocks that aren’t in demand. So, it’s essential to be aware of the changes in purchase patterns and preferences of your customers. You can monitor this by noting a decline in purchases of a specific product and an increase in another of similar use.
For instance, in the early 2000s, many people owned phones with physical keys. However, many people stopped buying such phones in favor of smartphones. Thus, if you are a phone dealer, the best thing to do would be to reduce your stock of qwerty keypad phones significantly and increase your smartphone stock.
Failing to take note of the changes in customer demand may lead to accumulating obsolete stock that may hold back your financial growth and potential. So, to clear your obsolete current stock and inventory, you may reduce the price of your products to retrieve your purchase value. On the other hand, you may use outdated products for promotional purposes.
And more so, to avoid obsolete stock scenarios, you can implement a perpetual inventory system for forecasting customer demand and strategizing for possible fluctuations.
Automate Stock Requisition And Reorders
Replenishing your stock at the right time is essential to ensure that there is no time for your customers to miss a specific product. As mentioned earlier, you can link your point of sale with your perpetual inventory system. When a customer purchases a product, it’s automatically removed from the inventory database in real-time. And as such, the inventory manager can easily monitor the stock level.
Moreover, to make your stock management work more efficient, you can automate your stock requisition. When your stock goes below a certain threshold, your system can initiate the requisition process by sending you alerts and notifications.
To effectively monitor the growth of your business, you need to establish your key performance indicators (KPIs). The benefit of having KPIs is to help you give more focus on your strengths and then take the appropriate steps to eliminate your pitfalls.
To help you optimize your perpetual inventory system, consider tracking the following metrics:
- Procurement tracking and status
- Duration of cycles
- Turnover rate
- Carrying costs
- Write down and write off
An efficient system can help streamline your inventory processes. And in that regard, the perpetual inventory system can be a one-stop solution center for your inventory needs. The fact that you can get real-time updates of your inventory makes it a better option. This article has illustrated the tips you need to use a perpetual inventory system effectively.