Inventory Turnover: It is widespread for entrepreneurs to get lost in inventory turnover. Even those who hire employees just for this task need to know how many items of each type are in storage. Otherwise, one commodity is bought or produced in excess, and another is lacking.
Taking control of the situation prevents various types of damage. To help the market, Conta Azul has compiled the most common mistakes that business owners usually make and how they can be resolved.
Below, you can find out what these errors are and what advice we have to avoid them. Thus, it is possible to manage the business with peace of mind knowing that there is no product spoiling and that there will never be a shortage of goods for customers.
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Why Is It Essential To Control Inventory Turnover Well?
Inventory turnover – the same thing as turnover – calculates how often an average inventory will use used in a given period. For example, if the average banana stock of a fruit plant is nine bunches and it sells 27 in a week, there have been three turns of banana stock.
When calculating inventory turnover, mainly item by item, the entrepreneur has more control over his business. Think that being wrong about a product can lead to buying more than you need or missing out. Running out of merchandise to sell can be just as harmful as leaving too much would be.
The importance of this step is most evident in businesses in the food sector. After all, products stored for a long time expire. So, buying more than necessary will likely lead to losses by discarded ingredients.
However, other segments also benefit from this operation. Electronic products, for example, can oxidize or become obsolete due to new releases. In all situations, the business owner needs to foresee sufficient quantities for customers to buy at any time.
Also, you don’t need to use this calculation just for past situations. The inventory turnover operation allows forecasting the required quantity of each purchase according to the expected sales of products. Don’t forget to consider expiration and seasonal dates.
A Stock Control Worksheet Helps A Lot At These Times.
Nine most common mistakes to watch out for and how to avoid them
Learning from the mistakes of others is more cost-effective. That’s why we’ve listed the most common errors regarding stock rotation. So, you can be aware and avoid them.
The list covers difficulties that several companies face, regardless of the sector in which they operate. Therefore, also study the specific reality of your market. For example, how restaurants organize inventory to keep ingredients fresh for longer. Speaking of which, check out our free financial guide to restaurant management.
Quantity Of Products
Many people make mistakes in registering or counting the number of products. Then, when it comes time to hit reports with sales and leftover items, it looks like you had an item lost or purchased too much. It can happen for several reasons.
Manual control, inventory disorganization, and lack of operating protocols are among the most significant causes of wrong item quantity. Automating processes and mapping inventory should reduce this problem.
Manual control causes several problems. Among them, the number of products mentioned before, due to not counting or double counting some item, for example. Also, you can forget to write down products without the correct expiration date. And finally, it’s a significant delay in the inventory turnover operation.
Automate everything you can. Completely manual control is a significant delay in team and business operations. Just imagine finding a product missing when the customer is at the counter and leaving it waiting while looking.
Lack Of Team Training
It is more common than it seems to hire unqualified employees for operations or move them around without any training. Instead, invest in these people’s professional growth, and your business will be the first to reap the rewards.
Training with continuous follow-up may be necessary if the entrepreneur uses manual methods. However, it will be easier to train the team by opting for digital tools, accelerating the learning curve.
Not doing merchandise Segmentation
Many entrepreneurs keep everything in stock anyway, and that’s the right formula for trouble. Segment the goods following an organization that makes sense for the business, such as by product type, expiration date, etc. Don’t forget to categorize and identify boxes and shelves.
One possibility to segment goods is the ABC curve, an organization of stock according to greater or lesser output. Thus, observing the products that must be replac more quickly is easier.
Also Read: Virtualization In Cloud Computing And Types
A company usually changes the mix of products offered over time. So, first, don’t forget to remove it. Otherwise, it complicates the inventory turnover operation, making it slow and confusing.
Make sure your inventory is always up to date. Check item types, versions, and expiration dates, and make sure there are no duplicates. Even the slightest difference between products and names should be noted.
This issue causes and will cause inefficient or non-existent inventory turnover. If the entrepreneur does not know how many products or inputs of a particular type are stored, how can he plan purchases?
It is essential to know the average inventory time for each item. Thus, it is possible to have regularity in acquiring new ones, ensuring that no customer runs out of merchandise or that any product is collecting dust in the warehouse. For this, there is no other solution than to learn how to calculate inventory turnover or turnover.
Proper planning even affects the price of the product. Check out what the CEO of Conta Azul, Vinicius Roveda, has to say on the subject:
Communication Failure Between Teams
The inventory organization, administration, product purchasing, and sales teams must be on the same page. Unfortunately, many problems occur when communication between these people is ineffective, either due to a lack of practical tools and protocols or even difficulties in the relationship between them.
Not Checking The Receipt Of Products
Many entrepreneurs rely too much on suppliers and too little on the employees they hire. The consequence of this is products with lower quality, expiration date, and quantity than the one purchased, which, because they are not verified, are read as an error by those responsible for the stock. Don’t do this in your business.
The supplier may be a personal friend and have worked with you for 20 years, but business is business. Must verify every delivery not to have an item too much or too short not counted. Not that he will be dishonest, but everyone is prone to error.
Using generic, other-purpose, or outdated digital tools increases the chance of error and delays inventory turnover. Management systems reduce bureaucracy, speed up and give assertiveness to this work. Why not use them?
Conta Azul Pro is an integrated management platform that optimizes the administration of your business, simplifies inventory turnover, and centralizes all your company information in just one place. Discover the features and put everything in order.
Have A Perfect Stock With The Blue Account Pro
Stop spinning in the same place while trying to manage and rotate your business’s inventory. Instead, make this and other administration parts perfect with Conta Azul Pro, the best-integrated management platform.
This incredible tool assists in various operations and centralizes all company information in one place. Simplified or automated bank and tax reconciliation, your choice, are some of the features most loved by our customers.
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