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Train Your Staff Effectively

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While its essential to have a small team to help you with the logistics of inventory management, the rest of your employees should be in on it too. Managers will focus on larger jobs, such as recording inventory reports and identifying potential issues. But you and your managers need to get the rest of the staff involved daily.

Train your kitchen hands and waitstaff to be aware of inventory issues. Teach them why their actions are essential, such as keeping an eye out for variances and carefully rotating stock. Since they deal with the ingredients the most often, make your line cooks and kitchen staff responsible for recording any pre-consumer waste. Whenever they make errors or have to discard rotten food, tell them to make a note of it.

Forecasting For Inventory Control

Instead of using a manual method to reorder, look at ways to mathematically forecast what is in stock or when to order. These methods can include categorizing your stock, such as in the ABC method, but mainly show what you currently have in store:

  • ABC Analysis: This method of supply chain forecasting divides all on-hand inventory into three distinct groups. A items are those of high value and low sales frequency. The budgetary impact of these items is significant, but their sales are not predictable. B items are those of moderate value and moderate sales frequency. C items are those of low value and high sales frequency. These items require less oversight due to their lessened monetary impact and constant turnover. Using these delineations for inventory helps you prioritize by separating out products that need more attention than others. Forecasting done with ABC analyses calculates the number of stock available based on this delineation. Additionally, storage and packing locations can be set up to reflect these delineations.
  • Reorder Point Formula: The ROP formula mathematically tells you the right time to order or produce more stock. Using existing information, calculate the sum of your lead time demand and safety stock. You may need to know the reorder lead time alongside this formula, which is the time between placing an order and when you receive it. You must account for the lead time when calculating order timing. The formula for reorder point is:

What ROP Means


Determine Key Performance Indicators

Some inventory errors are unavoidable and what I consider growing pains for many successful businesses. Using and sticking to KPIs to manage inventory can be one of the best defenses when it comes to measuring the impact of business operations. Every business and set of KPIs is different, but here are a few common KPIs to pay close attention to:

  • Average Days to Sell Inventory : This is a measure of how long it takes your company to turn inventory into sales, and varies by industry. Remember, large-ticket items typically move slower than small-ticket items or perishables. A formula for calculating DSI is x 365.
  • Stockouts: This represents the amount of times demand cannot be met due to the absence of required inventory. It can help provide a big picture view of how effective your business is at purchasing and production.
  • Rate of Return: This tracks and rates the percentage of orders that are returned and need to be restocked. As you monitor this, you should also track the reason for the returns to address any problems in the supply chain and identify trends that might prevent future costly returns.

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Executive Guide: Best Practices In Achieving Consistent Accurate Physical Counts Of Inventory And Related Property

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This Executive Guide describes fundamental practices and procedures used in the private sector to achieve consistent and accurate physical counts of inventory and related property. The Guide summarizes the fundamental principles that have been successfully implemented by companies recognized for their outstanding record of inventory management. It also explains and describes leading practices from which the federal government may be able to draw lessons and ideas. This guide applies to most forms of federal inventory, but some of the practices discussed may not be applicable to bulk, natural resource, and nonturning inventories, such as the Department of Energy’s strategic petroleum reserve.

What Is Sku Management

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SKU management is a subset of inventory management that helps to identify, track, and categorize sellable inventory using a unique alphanumeric code. SKU management helps businesses keep their inventory organized, as all information regarding a specific product can be pulled up quickly .


For example, having a SKU called 248RSJGDFN might seem like gibberish but it is actually may be more helpful than Red Shirt since you can easily get that confused with similar shirts. In fact, you need a separate SKU name for each size of the same red shirt.

Managing SKUs is essential if you sell more than one product. While it may start as an easy process , it becomes more critical as you grow, expand your product line, and sell more products, more quickly.

Think about if you are working with a third party, like ShipBob or Amazon. Proper SKU management allows these companies to keep track of all inventory in their large fulfillment centers and easily locate each SKU, so they can be accurately picked, packed, and shipped as orders are placed. This can be done using a warehouse management system , which keeps track of their different SKUs, so pickers can easily pull up SKU details and help ensure they have the right item.

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Automate Everything You Can

Workflow automation refers to systematizing part or all of a workflow to improve efficiency and lower human dependencies. In essence, it means utilizing technology to centrally manage a complex web of working parts while reducing the need for manual labor.


Automating part or all of a supply chain has huge potential benefits namely, freeing up your people while increasing productivity and accuracy. In fact, a report by McKinsey predicts that automation could accelerate the productivity of the global economy by between 0.8% and 1.4% of global GDP annually.

With the right system, workflow automation is achievable for any business:

  • Customize the storefront experience for both B2C and B2B buyers
  • Streamline selling across multiple channels and stock locations
  • Set-and-forget your purchasing and order processes
  • Automatically track revenue and expansion goals
  • Apply bulk actions for high-order volumes

Use Both Fixed And Movable Tracking

Investing in your inventory management from the get-go can save a lot of hassle in the long run. Both fixed and movable tracking are needed to create a professional inventory management system. Why? Because by combining fixed and movable tracking options, you ensure that you always know whether the equipment needed to process the order is up to scratch, where each product is placed, what your products status is, and which products are ready for fulfillment and shipping while assigning warehouse destinations precisely.

Simply put, it makes your fulfillment process easier and quicker. If you are new to warehouse management terminology, here is a short explanation of both:

Fixed Tracking


Also known as asset tracking, fixed tracking refers to the constant monitoring of your equipment used in manufacturing your products or those that help you fulfill your warehouse and fulfillment tasks. Things like RFID tags or barcodes can be used to track equipment location and condition.

Movable Tracking

Also known as inventory management, movable tracking is where you track where each product is, how many of each product you have, which products need to be restocked, and what products are in excess. In short: its the real-time management of what stock you have and in what numbers you have it.

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Stages Of Inventory Management

  • Purchasing. You must keep track of the inflow of raw materials for your products or items you will further sell.
  • Manufacturing. This is about the quantity of products your organization has made .
  • Storing. This is the pivotal phase of inventory management that is responsible for hoarding raw materials and finished items.
  • Sales. This is when the products change hands and the seller gets payment for them.
  • Reporting. At this stage, the dossiers on the amounts of sales and payments are compiled and processed.

In addition to tracking the current inventory flow, the best ways to manage inventory include forecasting demand so that you know what customers want.


Alongside inventory management, there is one more term inventory control. It has a narrower meaning and applies only to the storing phase of inventory handling, leaving purchasing, manufacturing, selling, and reporting tasks out of its ken. The success of the inventory control policy depends on the accountability of your stocks. The employees responsible for it should have all related data at their fingertips. So, they will know how much stock is available, where it is kept, and what the state of it is.

What If You Need Help With Inventory Control

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What if your company isnt sure about managing inventory? Have operations grown too large for you to feel like youve got inventory under control? Thats the right time to speak with a partner like Red Stag Fulfillment.

Our experts will help you understand the systems and tools available that might solve your concerns. If youre looking to outsource and offer products we specialize in , then well discuss how Red Stag can help. If your products arent the right fit, well give you a questionnaire to bring to other 3PLs and point you in the direction of some.

Inventory control is challenging, especially as you expand. Youre going to face challenges and have questions. One of the best things your company can do is find a partner wholl listen, understand, and answer when you need it.

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Inventory Management Techniques And Best Practices For Small Business

Here are some of the techniques that many small businesses use to manage inventory:

  • Fine-tune your forecasting. Accurate forecasting is vital. Your projected sales calculations should be based on factors such as historical sales figures , market trends, predicted growth and the economy, promotions, marketing efforts, etc.
  • Use the FIFO approach . Goods should be sold in the same chronological order as they were purchased or created. This is especially important for perishable products like food, flowers, and makeup. A bar owner, for example, has to be cognizant of the materials behind the bar and apply FIFO methods to improve bar inventory. Its also a good idea for nonperishable goods since items sitting around for too long might become damaged, or otherwise out of date and unsellable. The best way to apply FIFO in a storeroom or warehouse is to add new items from the back so the older products are at the front.
  • Identify low-turn stock. If you have stock that hasnt sold at all in the last six to 12 months, its probably time to stop stocking that item. You might also consider different strategies for getting rid of that stock like a special discount or promotion since excess stock wastes both your space and capital.
  • Track your stock levels at all times. Have a solid system in place for tracking your stock levels, prioritizing the most expensive products. Effective software saves you time and money by doing much of the heavy lifting for you.
  • Pay Attention To Item Quality

    When items arrive in your warehouse damaged, spoiled, wrong color or size compared to what was ordered, or otherwise unusable, its like not having that item to begin with. You cant possibly send it to your customers in that condition. And if you store it anyway, youre taking up valuable real estate space.

    Quality control measures should be implemented early and often. Take stock of how items arrive and address problems as soon as possible so they dont affect your inventory management processes.

    This can be as simple as giving your warehouse employees a check sheet of things to look for when shipments arrive. Establish inventory m management best practices to address issues as they arise, such as contacting vendors for credits.

    From there, consider how storage practices might affect item quality. For example, exposure to light, heat, or humidity could affect an item after its been stored.


    If you have inventory management software like Zenventory, you can manage specific items and their storage requirements within the software. Add notes about how certain items should be inventoried and stored, quality issues that have arisen in the past, and other details to avoid making the same mistakes.

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    Inventory Management Techniques Improve Customer Retention

    And finally, youll be able to improve your customer retention rates when you implement some of the key inventory management techniques weve outlined today. If you have the items customers want, when they want them, those customers are far more likely to come back to you in the future.

    Companies spend small fortunes luring in new customers, but dont forget about the ones you already have. Theyre a valuable source of revenue and you wont have to spend as much money upfront bringing them back into the fold.

    Stock Quantities: How Much To Keep

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    The type of stock you have can also determine how much you should keep on hand.

    For raw stock, look at the following factors:

    • The reliability of the supplier and alternate sources of supply
    • Whether you produce and deliver the components in batches
    • The predictability of demand
    • Bulk discounts

    Unfinished stock, also called work-in-progress , costs you in storage space but is often beneficial. You can add an extra level of protection to your production with unfinished stock. For example, if you have a machine in the middle of a process that is at risk of breaking down, you can pull the unfinished stock to bypass that part of the process.

    Keep extra finished stock around when you identify a products demand or when you are confident that your batch productions are adequate. You would also naturally have extra finished stock around when you are completing a large order.

    How much consumable product stock you should keep around also depends on the reliability of your suppliers. If the demand for those products is well-known and steady, you may want to keep extra. Further, if you expect price rises or get a significant discount for bulk buying, having additional consumable stock is acceptable.

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    Keep A Close Eye On Your Data

    You collect a ton of data throughout your workday. There are many ways to put it to use, from knowing where each item is located and how much of it you have in stock, to forecasting the demand for your products. This data may also identify other key figures in your operations, like areas where you can improve your workflow.

    How this makes you better: When you identify your data baseline, you can make the adjustments you need to continually upgrade your operations performance.

    Use Warehouse Management Software

    A warehouse management system can provide support, remotely monitor your warehouse and collect real-time data from your automated storage and retrieval systems, regardless of the location.

    Modula Cloud is a one-stop shop for your remote management, support, and analytics needs, whenever and wherever you need it.

    Built-in and always running, our Modula Cloud platform captures all data in an easy-to-navigate online portal where you can securely monitor and manage your operations, from any device, anywhere.

    Benefits include:

    • Remote monitoring of your advanced Modula storage systems
    • Real-time updates and alerts
    • Remote support, diagnostics and resolution
    • Predictive warehouse maintenance

    Apart from a management software, warehouse management tools include barcodes, scanners, barcode labels and RFID tags that offer real-time updates leading to effortless and accurate inventory data.

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    Best Practices For Inventory Management For Warehouses

    byNewcastle Systems, on Mon, Dec 05, 2016

    Supplying your products on time and with multiple channels can be quite challenging. You receive constant pressure from various buyers and store locations. It is a challenge to keep up with inventory demands while monitoring the inventory process and the needs of your workers and your customers or buyers.

    Without going into the disadvantages of inventory reduction, but focusing on a businesses’ ability to fulfill all the requirements brought in by customers. This is why your business needs to have a proper inventory management practice, as things can quickly go haywire if youre not careful managing the inventory process. With that in mind, here you have some of the best ideas that will make inventory management run smoothly.

    No Compromise On Quality

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    Quality control is one of the most extreme significance factors in any size business and it should be executed as soon as possible. Having a procedure to guarantee quality provides a direct connection toward consumer loyalty and business development.

    The procedure is simple, and you can start it quickly as you can. All your employees have to do is check all the goods they receive. They can look for three major points such as:

    • Date of expiry
    • Product is sealed or not?Is it damaged?Is the product or item leaking?If yes to any of these, you should return the product because that is no good for your customer and your business as well.
    • Once all these qualities are check then you have to check the warehouse environment is good for the stock? If not, then you need to make it favourable in your stock.

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    Split Inventory Into Different Categories

    If youve been managing inventory for any length of time, the idea of breaking up your inventory into different categories should seem obvious, but we encounter many businesses that arent utilizing this approach.

    Too often, we think of inventory as one giant, amorphous thing. Its all the products and manufacturing components we use in our business.

    This can make tracking inventory feel daunting.

    Its often easier to better handle your inventory management issues by breaking things down into categories. You will still have one overarching inventory, but by separating products into groups, its easier to see how individual items are performing.

    There are a wide variety of ways you can break up your categories. Dont assume its only by product type. Inventory can also be separated by how fast its turnover rate is, profitability, and so on.

    Think of it like the old forest and trees analogy. Your entire inventory is the forest, but, we can focus on individual trees that may need attention by breaking things down into categories.

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