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Techniques to optimise inventory management

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inventory management

In the UK, there are an estimated 5.5 million small businesses, making up over 99% of the total business population.

As many small business owners will know, cash flow can be a struggle. Affecting everything from stock levels to the eventual closure of a business, small businesses often bear the brunt of cash flow issues. But one way small businesses are overcoming this is by implementing clever inventory management software.

To find out how, read on.

What is inventory management?

Inventory management, in its simplest terms, is the process by which you trace and monitor your business’ inventory as it is bought, manufactured, stored and used. Inventory management refers to the entire flow of goods, accounting for them at every stage. From the initial purchase to the sale, inventory management means you always have the required stock at the right time.

Why is inventory management important?

You may be wondering what makes inventory management so important. In short, inventory management is vital to a company’s health. Inventory management helps make sure there is just the right amount of stock to hand, mitigating against the risk of you running out or over-ordering.

Inventory management has three main benefits:

  1. It saves you money

Yes, that’s right. Inventory management helps you save money! By understanding stock trends, you can see whether you have something in stock. If you do, there’s no need to go and purchase more. By doing this, you can get away with keeping less stock at each location. Less stock at each location will reduce the amount of stock that goes to waste.

  1. It’ll improve your cash flow

By properly managing your inventory, you can invest in your most popular stock, so cash flow doesn’t stall.

  1. It keeps your customers happy.

By having adequate stock, you can keep your customers smiling by ensuring they never have to wait too long for their items.

Inventory management techniques that you can implement today

If you’re dying to start managing your inventory, you’re not alone. Here are some of the ways you can begin to dabble in the world of inventory management:

  • Know your star products – An ABC inventory analysis is a good way to segment your warehouse stock based on how valuable it is to your company. Start by labelling your shelving systems with A,B and C, then begin to think about which products are your ‘stars’. In the ‘A’ shelf you’ll put all your most critical items, and ‘C’ shelf the least.
  • Set your stock levels – Ensure you have a robust policy that governs how you can reduce excess stock and remove obsolete items. After all, obsolete items can incur losses if you’re not careful.
  • Think about investing in ‘safety stock’ – safety stock is the stock you keep that’ll preventing stockouts where you may experience exceeded demand or delayed supply. This will ensure that you can remain resilient, even in unforeseen circumstances. Given that many businesses are currently experiencing supply chain problems, you never know when your safety stock will come in handy!

Final thoughts

Although inventory management may sound scary, it’s relatively straightforward to put into practice. By ensuring you’re always keeping on top of what you have, don’t have, and need, you can ensure your business stays afloat for years to come.


Kossi Adzo is the editor and author of He is software engineer. Innovation, Businesses and companies are his passion. He filled several patents in IT & Communication technologies. He manages the technical operations at

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