Inventory is associated with one of the biggest and most necessary costs in your business operations. Many small businesses try to find ways to save money on inventory. It is highly important to have good strategy for your inventory management.
All retail businesses have a supply chain. One of the essential concepts of inventory management is to be able to optimize your business’ supply chain. A supply chain is defined as the network built among different companies producing, handling, and/or distributing a specific type of product. It involves all the steps and processes associated with bringing a product/service from suppliers to customers.
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How to Maximize the Use of Your Supply Chain
To cut your expenses, increase your cash flow, and raise profits, you should apply good supply chain management to your business. Below you can find top tips that are necessary for such management.
- Do Not Rely on the Same Supplier Base
Diversify your wholesaler and vendor base. Don’t rely too much on a few key suppliers. Have backup plans in case one of your suppliers cannot provide the products you need. Know all of the major wholesalers/vendors of each product category you offer. Check in with various sellers and test the market to find out whether you can get better prices or better terms of sale.
- Try Drop Shipping
To drop ship means to sell products that are not currently in your inventory and then pay a wholesaler/vendor to complete the order and ship the product directly to the customer. To cut your inventory costs, offer more competitive prices, and enlarge the range of products you sell, use a drop shipper. Not all companies will do drop shipping, but you can drop ship some products directly from the manufacturer.
- Use Supply Chain Management (SCM) Software
You can use one of the many cloud-based SCM software options to get the right SCM support and features specifically for your business. SCM software can help you handle logistics, track shipments, make your supplier relationships more data-driven, and have a solid overview of the state of your business.
Interestingly, Voodoo Robotics has recently introduced the SKU-Keeper inventory management system, which is a small wireless device. It can be attached to any location of a warehouse to keep track of the inventory stored there.
- Turn to International Suppliers
Today it is much easier than years ago to be an international business owner with a large supply chain of vendors/wholesalers all over the world. So you can easily diversify your supplier base to offer products from around the globe.
Efficient inventory management is crucial for off-price retailers. Take some time to do your research and learn more about how your supply chain makes part of your overall inventory management process.