When managing stock, we think it's best to stick to the following 4 principles:
- Never run out (or get caught rushing at the last minute, paying high shipping fees)
- Keep stock on hand as low as possible
- Don't spend too long administering stock - but have a system
- Know where everything is
We built Silo to follow these principles. Let's go through them:
1. Never run out
When you run out of essential items, your business can grind to a halt and waste money:
- Staff waste time looking for items
- Staff discuss or argue how to get by without items
- Your business ends up having to pay exorbitant shipping fees to rush replacements
- You often have to use non-ideal substitutes that happen to be available more quickly
All these activities waste and cost money, and make it likely that your customers become unhappy. So the core of any good inventory management system is never to run out.
2. Keep stock on hand as low as possible
Holding stock is expensive. When you hold a large quantity of stock, that is your business's money tied up in boxes sitting there in storage.
Holding stock also makes businesses less agile. It means you are 'forced' to keep using that inventory or find a way to sell it. It encourages businesses to do undesirable things like selling a particular product that doesn't make money or make customers happy - because they have to use up their stock.
A good inventory management system helps you keep a minimal amount of stock on hand.
3. Don't spend too long administering stock - but have a system
You didn't go into business to manage a storage room.
A good inventory management system makes it easy to find things, and easy to keep track of how much you have on hand. It also should make it easy to re-order items that you use all the time.
It's important to have a system that all your staff know, so that everyone is managing stock in the same way.
4. Know where everything is
This one's obvious - if your team knows where to find everything, they'll be able to work quickly, without confusion. They'll be less likely to misplace items or run out. Phew!