For retailers or manufacturers, managing inventory has always been challenging. They either need more items or order in surplus. The ideal situation for inventory management is when stock arrives in the warehouse just before you sell the previous stock. However, the reality is much different.
The retail or manufacturing process is a chain of events, with multiple processes working together. For instance, let’s say you order inventory in time, but the supplier/vendor delays the delivery. Customers leave your store empty-handed.
Nowadays, various new-age inventory management solutions help you mitigate inventory management challenges easily. The most prominent among them is Intuit’s QuickBooks Enterprise. QB Enterprise offers companies a comprehensive solution to manage inventory in one place.
Let’s look at some inventory management best practices and how QuickBooks Enterprise helps achieve them.
Stocktaking is the process of checking the stocks manually to ensure there is no discrepancy in the data. Although it may sound exhausting, stocktaking helps you analyze the current status of your stocks. It also tells you whether there is any discrepancy in the data and alerts you of any theft. Conduct a stocktaking process periodically to ensure a sufficient quantity of inventory.
Properly setting up inventory is a vital aspect of inventory management. When an inventory reaches the warehouse, it must be stockpiled on the shelves. Companies use two methods, FIFO (First In First Out) and LIFO (Last In First Out), to stock their items based on parameters such as type and cost evaluation, among others.
FIFO - It is a method where the items that are stocked first are sold first. FIFO is used for perishable items with an expiry date. For instance, a grocery store selling juice boxes must sell the previous stock before the new stock. Otherwise, they might have to throw away the old boxes.
LIFO—In Last in First Out, the items added recently go out of the shelve first. This method can be used for non-perishable items, as it reduces the effort of reshuffling.
You can use any method among these depending on the items you sell.
Inventory forecasting is the practice of predicting the requirement for items over a certain period (days, weeks, or months). Forecasting ensures that you always have the apt number of stocks to fulfill customer demands. However, it is also vital to ensure that you do not overstock the warehouse.
Effective inventory forecasting can be carried out by evaluating the market trends, historical data, seasonal requirements, etc. Another essential aspect to factor in while forecasting inventory is the time suppliers take to deliver items. It tells you how fast the new stock can reach you before the current stock gets sold out.
The latest inventory management solutions available in the market offer actionable insights into inventory forecasting.
A batch tracking system ensures efficient inventory management as you can trace each item's location, status, and expiry. Batch tracking is accomplished by giving each item a unique code, depending on its type, company, location, etc. Hence, batch tracking enables you to facilitate inventory management with ease. Nowadays, businesses use RFID or bar codes for batch tracking that can be read easily with a barcode scanner.
Effective inventory management can be attained only if you classify your items effectively. There are various methods for classifying inventory. For instance, you can classify your inventory by type, such as raw materials, finished goods, or packaging items. Or, you can classify them based on the status of the stock, such as safety or anticipatory stock.
However, the ABC classification is the most common classification method retail companies adopt. ABC classification is a method to analyze stocks based on the demand-supply mechanism. In ABC classification, the items are classified into three parts -
A - The most sold items that require regular stocking (and therefore reordering). You must monitor these items constantly as they must never go out of stock.
B - The items that are sold less than the A category stocks. Hence, these items require less reordering but cost more to stock.
C—The C category contains the items with the lowest sales rates. These items take up most of your inventory space and cost.
By using the ABC analysis, companies can evaluate the value of each stock by calculating the inventory costs over sales profit.
Picking and packing are essential parts of inventory management. When a customer places an order, a worker must pick it up from the warehouse, pack the item, and ship it to the address.
However, the picking and packing process is more challenging than it sounds. When dealing with various orders, an efficient pick, pack, and ship process ensures real-time updates of inventory status, enhancing the inventory management process.
Depending on your business, you can choose among the following pick-and-pack processes-
Piece Picking - The picker picks up the orders one by one from the warehouse before sending them to the packing station. This method can work only if you own a small business.
Batch Picking - The picker is assigned multiple orders together because the volume of orders is higher.
Zone Picking - The warehouse is divided into multiple zones, and each zone is allotted to a picker. The picker picks up the order from only his zone and carries it to the packing station.
Wave Picking - It is a combination of batch and zone picking where pickers pick up batch orders from their zones and send them to other zones for more picking. This method is suitable for large companies with a high volume of orders.
You must analyze the order volume and decide which method to prefer.
When your business grows, managing inventory without technological intervention becomes challenging.
As a retailer or manufacturer, you must always be looking to adopt new and advanced technological solutions available in the market.
For this, you can attend seminars and conferences conducted in the retail tech domain. You must also set up a dedicated team for technological research and analysis.
QuickBooks Enterprise for Inventory Management
The best practices mentioned above are vital to manage inventory effectively. QuickBooks Enterprise, with its advanced features, helps you do just that. Let’s see how.
Manage Multiple Warehouses—With QB Enterprise, you can manage inventory in multiple locations and shift it among them.
Centralized Dashboard - QB Enterprise offers a central dashboard that gives you an eagle-eye view of the entire inventory management process. You can manage vendors and suppliers on a single screen.
Mobile Bar Code Scanning - The barcode scanning feature gives you real-time information on items, helping you reduce errors and send the shipment in time. You can scan the barcode from your mobile device using the QuickBooks Android app.
FIFO - By enabling the FIFO setting in QB Enterprise, you can ensure that the items stocked first, go out to shipping first.
Pick, Pack, and Ship—QB Enterprise offers a unified platform to streamline the pick, pack, and ship process. You can assign jobs to pickers, and pickers can update the status in real time. The inventory is updated automatically in the system.
QuickBooks Enterprise is a new-age solution with advanced features for inventory management. However, hosting it on the cloud enhances its capabilities even more. QuickBooks Enterprise hosting is the process of hosting your QuickBooks Enterprise and data on the cloud platform of a third-party service provider.
With QB Enterprise hosting, you can access your software and data, even from remote locations. All you need is a smartphone, laptop, or tablet and an internet connection. Moreover, multiple users with authorized credentials can simultaneously access and update QB Enterprise software and data. In addition, the providers implement state-of-the-art security safeguards to ensure your data is safe.
Want to see how QB Enterprise on the cloud works? Connect with our Solutions Consultant now.
Bhavleen is a writer at Ace Cloud – a leading hosting provider for tax software, with several years of experience in the cloud industry. She loves to research various technologies and has a firm grasp on topics like Accounting, ERP, VDI, and HIPAA.