Managing your inventory and your warehouse requires a certain degree of planning. Here are some ideas for managing your inventory effectively.
Divide your product stocks into separate categories
There are generally three kinds of categories your products can go into:
- The first are the kinds of products you love. They don’t take up much room, and thus don’t cost much to store. At the same time, they are well received and get sold a lot.
- The second kind of product is the kind of product you hate. This product doesn’t get sold often, but it takes up a lot of space and costs you a lot to store.
- The third kind of product is in between: It gets sold often, but it costs a lot to store.
Maximise the effectiveness of your inventory management system
You can increase the effectiveness of your inventory by placing the most popular items in the areas that are most accessible. The items that don’t get sold often can be put in a less prominent location.
However, it’s not just where you place your items that matters the most, but how much of the product you stock at once. Obviously, you will want to store more of the first kind of item to keep up with the high demand while storing little of the second kind of product.
In fact, you may want to cut out some of the second kind of products entirely from your line. You can use the Pareto Principle to your advantage here: 80 percent of the effects (in this case, your revenue) come from 20 percent of the causes (in this case, the products that take up 20 percent of the storage space, with 20 percent being just an example). You can often cut out the other 80 percent of the causes (in this case, your bulky products that are not in demand) and still receive the same results.
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