Though we are only creeping into the fall months (with a slight glimpse of winter on the horizon), somewhere in the back of your brain you’re thinking about your company’s inventory and wondering: how are we going to prepare for holiday season 2015?
Congratulations, you survived half the calendar year with your inventory! The bad news? Another holiday season is already on the books, as it is year after year, just biding its time until it can unleash the inevitable panic and chaos that comes when inventory management demands attention.
No matter what your company sells, inventory around the months of November and December are generally in high demand. This fact, while great for business, can also be extremely overwhelming and stressful if you’re company is not properly prepared for the influx in supply and demand. Particularly for small businesses who may lack the resources necessary to produce inventory at a quicker, more dense rate than is usual.
Yet, have no fear small business owners! If you have experienced rough holiday seasons in the past, read through this post to broaden your perspective on how and when inventory planning can make or break the forthcoming seasonal rush.
Robby Slaughter, a principal for AccelaWork, along with other small business owners, discuss unique ways of Managing Inventory during the holiday season with Wasp Buzz. Below is some information you may find extremely useful for 2015!
For one, managing inventory is very different when comparing small businesses versus large retail companies. According to Slaughter, the contrast between the two is large:
“Big retail companies have to deal with theft, which often isn’t a problem for small businesses — especially those that don’t give the general public access to their inventory. These companies can also move products between stores to deal with regional demand. And they have marketing budgets that can help to move inventory by running specials or other programs
Utilizing software and spreadsheets to track inventory is necessary for many companies, but AccelaWork does not have the need for it. However, Slaughter agrees that forecasting is difficult — no matter the size of the company. Below are two strategies that retailers utilize to help protect against a failure in seasonal inventory supply:
An inventory reserve refers to the protection used to account for an item not sold at its cost due to deterioration in value.
Not only does this help small businesses estimate financial loss for the current season, which will help them put aside money to cover the loss, but it also helps with forecasting in future years.
Dealing with Shrinkage
Shrinkage is a nice way of explaining lost, stolen, or misplaced items. Suppose a supplier short changes you on an order. Who are you going to believe?
One solution might be a perpetual system, fully automated, which captures every movement of inventory from receiving docks to the sales register using barcode scanners or mobile devices. The goal is to know where the inventory is sitting, but a determined thief can “trick” one of these systems.
Instead, do a physical count. The downside is a process that takes time away from production and may require extra personnel. A good compromise is cycle counting – counting a small amount of inventory every day until entire inventory stock is cycled through. Once all inventory is counted, the process starts again from the beginning.
This may seem like more work than is necessary, but again, it ensures proper inventory for the current year and assists in forecasting for years to come. Keep this thought ever-present in your mind because it validates the time spent on it.
Finally, there are four tips to help finish the year productively and start the next year on solid ground:
- Review your goals.
- Refresh your business. Update your website, documents, catalogs for relevancy and accuracy.
- Begin forecasting.
- Conduct an inventory audit. Verify what’s in stock. Note obsolete or damaged inventory and reduce valuation.
Keep these in mind as you face the holiday rush!