Inventory planning is one of the essential functions in business since it is what makes or breaks a company in the market. If there are too many items, it will lead to high inventory costs, a lack of space, and cash flow problems on the balance sheet. If there aren’t enough items, you won’t meet customer demands and may lose valuable customers looking for what they want.
This article aims to help you prevent these occurrences from happening. Several mistakes are prevalent when planning your inventory, and as a business, you will need to be keen enough to avoid them.
Not Writing Down All of The Needs
The first step to inventory planning is writing down all of the items you need. This includes both products and services and any materials required to fulfill orders. When you write down all of your needs, you start to feel what your business needs and whether or not the items in your store match those needs. If you don’t, this will be an obstacle in your planning.
Not Honoring Your Needs and Wants
Once you have written down your needs, you should honor them and get the required items for your company; it is time to bring in everything to make your business thrive. This makes planning your inventory smoother and prevents issues from coming up later.
Mistake 3: Not Writing Down All of The Vendors
This might be an area that you are less concerned about, but you should use this as an opportunity to write down the vendors that you will use. Many businesses in this world would not have a dream of keeping their inventory without a vendor. If you start writing down the vendors as you need them and settle everything, your planning for inventory will be much better.
Not Accounting for Moving Costs
When a customer orders and you fulfill their order, you consider these orders as moving costs. If you don’t consider that, you can end up with a large amount of unsold inventory. This will set you back and make your business look bad. For this case, when planning your inventory, the moving costs should be accounted for to avoid this issue.
Not Calculating Future Needs
You cannot plan your inventory without taking into account the future needs of your business. This is especially true in today’s world of Internet sales, where individuals order most items within a few hours. If you don’t get your reviews done, you will have many things sitting on the shelf that people can order from the Internet.
Not Balancing Inventory and Sales
Every business has cash flow. This cash flow is significantly affected by inventory. It will be hard to pay your expenses if there is too much inventory. On the other hand, if there isn’t enough inventory, you won’t be able to fulfill all of the orders and may lose customers who can’t wait for what they want. The best way to avoid this issue is to pay attention to your inventory and sales. It would be best to do this regularly, daily, or weekly. By balancing your inventory and sales, you will be able to make the adjustments needed to ensure that you get the cash flow you need.
Not Adjusting for Seasonal Demand
It’s impossible not to have seasonal demand in most businesses. Summer is very popular for many products, while the winter can make it hard to sell many of your products. This means that you need to have more items during certain times of the year and fewer items during other times. As a result, this will help you have as little inventory as possible while meeting customer demands.
In conclusion, inventory planning is a complex but essential function in any business. You must do this regularly to ensure that you always prepare for unexpected changes in your industry.