A company with a low rate of inventory turnover may find its warehouses overstocked on products. NAV inventory scanning reduces costs and improves inventory turnover rates by organizing processing and shipping efforts.
Inventory turnover differs greatly between companies. Smaller specialty shops will most likely keep as little inventory as possible to deal with the specialized amount of orders. A large retailer like Wal-Mart’s purpose is to have a wide variety of products, so the company will have many warehouses and resources to ensure high inventory turnover.
The causes of low inventory turnover include poor sales effectiveness, unanticipated spikes and troughs in demand, inventory count inaccuracies, and overstocking. Inventory turnover is an indicator of how well your company is doing in its market, and companies with higher inventory turnover rates may be shining brighter than you. Here are some tips for improving inventory turnover:
Pump up your sales team
It goes without saying, but a company is only as good as its salespeople. Without a good sales team, products will be sitting in a warehouse much longer than needed. Not only are subpar sales costing you money, but a poor sales rep can give customers a bad image of your company. This in turn will affect whether or not the company would consider returning for future business. You can improve your sales team by firing poor salesmen, hiring more people or adding a training program to improve sales skills.
Stock the best-selling inventory
Focus on optimizing the warehouse space for your best-selling inventory. This can be done by changing the layout or organization to better manage and ship products sold more often. For example, a company sells different kinds of baseball equipment. Bats make up 50 percent of its sales, and gloves are 15 percent. The company struggles to meet demand for bats because its warehouse is overstocked on gloves, and it may not be able to fulfill its bat orders. The bats simply sell quicker than the gloves. Slower moving products can fill up a warehouse and drag down a company’s inventory turnover rate.
Have a superior inventory tracking system
Humans can try to manually track orders coming in and out of the warehouse, but many companies use specialized systems like Microsoft Dynamics. These have superior NAV inventory scanning systems to help reduce inventory count inaccuracies by tracking orders in a computer system. A simple miscounting can mess up an order, leading to a lower inventory turnover rate. NAV inventory scanning eliminates the risk for human error while counting. Companies can also get into the habit of selling a product only to later find out it is currently not stocked. NAV inventory scanning lets users know when a product is out in the warehouse, so no customers will be sold something out of stock.
Focus on demand
There are many things a company can do to change product demand, the most popular being sales promotions. If your company designs office furniture and there is an upcoming office chair sale for “buy two get one half off,’ then warehouses must prepare for the upcoming demand by stocking up on more office chairs.
It is important for warehouse managers to communicate with a company’s marketing team because certain advertisements and sales strategies can lead to an increase in demand. The amount of items stocked in a warehouse needs to match the product’s demand. This leads to satisfied customers, properly stocked warehouses and more efficiently run companies. The better you predict what customers will want and when they want it, the less goods you will have to keep in the warehouse.
NAV inventory scanning improves inventory turnover and many other aspects of inventory management. Click to download the “Keeping the Physical World and the Virtual World in Sync” white paper for more information.