When you don’t have a handle on your inventory, it can be almost impossible to know when an item is out of stock or you have more than you need. The problem can be frustrating and costly. Most importantly, a poor inventory system creates unnecessary waste that harms the environment.
Today, we will discuss the importance of proper inventory management and the steps you can take to help your business and the world around you.
Why it is important to have the right amount of stock
When you begin to build up your stock or you secure a new warehouse, the first step that you need to take is to create an inventory management system. Your system needs to tell you how much of a product you have on hand at a moment’s notice. It also needs to analyze your current business and the movement of your products to forecast your future inventory demands.
If possible, it’s best to invest in a computerized system instead of using a manual system of counting and entering data on spreadsheets. That method leaves a lot of room for error. The last thing you need is to lose track of your stock, then make a sale and find out that you don’t have the product on hand. News can travel fast, and if customers find that you never have the items that they buy in stock, then it could hamper your reputation, and it could be hard to recover.
There are also risks associated with being overstocked for long periods of time. In addition to the negative effects on the planet, you may also need to pay excessive storage costs that you could avoid with a proper inventory system. Plus, if you order too much stock of a particular product, and that item is no longer desirable to the public, then you’re left with excess waste. This situation can be even worse if you store items that can expire over time. Needless to say, it is important to keep track of what you have.
Why overstock hurts the planet
Overstock issues are also harmful to our planet. Every year, businesses around the world produce billions of tons of industrial waste. In many cases, it’s due to a lack of a proper inventory system. The negative effects of this waste are far-reaching.
The most obvious issue is that when you need to keep the lights on in a warehouse while also keeping it temperature-controlled, you’re using a lot of excess energy. When energy is used, it produces greenhouse gas emissions which float up into our environment and create a layer of gas around the globe, which leads to global warming. If you’re wasting more energy on housing stock you don’t need, then you’re more at fault for those necessary emissions.
Every year, highway vehicles alone produce over one billion tons of greenhouse gases, so it’s already a problem. Overstocking products due to a poor inventory system only exacerbates the issue and our planet suffers.
Then there is the fact that many of the products that companies produce aren’t recyclable, so if they’re thrown out due to a lack of sales, then they make their way to the landfill. From there, a lot of products can leak and break down and make their way into the water supply. Plus, animals that pick up this garbage and try to eat it can be harmed in the process.
In addition to watching your inventory, you can also run a greener warehouse in other ways. You can illuminate the space with energy-efficient LED lighting or take advantage of windows to provide natural light. Managers can also enforce a paperless policy where the team sends emails instead of printing unnecessary paper. The point is that being eco-friendly is a way of life, and all of these small changes make a big difference.
Fixing your inventory issues
The good news is that if you have an issue with overstock, all is not lost. There are strategies that you can put in place to manage your inventory. The easiest way to go is to rethink your ordering process and order smaller batches of ready-to-sell items. While many businesses buy in bulk to save money, if you have a smaller operation, then you can order in smaller quantities. Then, look at the data to see how much you’re selling and modify your buying needs from there.
You can also look toward new technology to keep on top of your inventory. Start by looking into smart sensors that you can place in your warehouse and on your trucks. When items come in or go out, each item is scanned so you can see data in real time. Ensure the fastest reporting by implementing 5G in your sensors and supply chain technology and your inventory issues can become a thing of the past. Plus, you can plug this instantaneous reporting into your websites so customers can see exactly how much of a certain product you have on hand.
Another way to manage your inventory and only buy what you need is to look into the economic trends of the future and order accordingly. By using tools like Google Trends, you can look up your particular product and gauge consumer interest going into the future. Many of these reports will show you trends, so you can order what you need and not go overboard. It’s always a good idea to keep an eye on your target demographic and review the numbers to see what your customers are buying and adjust your inventory needs accordingly.
As you can see, there are many advantages to avoiding unnecessary overstock. In addition to avoiding unnecessary costs and improving your business model, you can also contribute to a cleaner, healthier planet.