Tweet

Efficient Ordering

Written by: Will Atkinson

Article Overview: Ordering is a critical part of maintaining a lean and efficient inventory for your store. A few simple best practices can help you keep track of this to save time and money.

Efficient Ordering

Inventory control is all about having the right items at the right time, but it's also about NOT having the wrong items, and being able to cope with delayed shipments, product changes, etc.

Ideally, you should have a good contact at each of your vendors from which you order so that you can reliably place orders without fear of them sitting idle on someone's desk, or of not being notified of backorders or out of stock items. If a vendor can't keep track of your order, or their inventory, it's probably time to pick a new vendor. If you have a long relationship with your vendor, and you're not getting the service you need, you should give them a call to discuss the issue to see what they can do to resolve it. If they can't, then you need to move on.

Second, once you've got a reliable set of vendors, you need to get a handle on the actual process of determining what you need to order, and how often you should order it. Let's discuss those pieces separately.

What to order? It's more complicated than determining what items you are low on stock on, you need to decide which items are selling, which aren't, and what WILL BE selling in the near term. If you are out of a seasonal item, and that season has just ended, you don't need to re-order it until next year. Don't order just because your stock is low. Order because it's low and you need more of that item.
A good inventory control system is vital here, because the reports should be able to tell you not only what items have low stock levels, but what items are expected to be selling and in what quantities. This is often called forecasting, but it doesn't have to be that complicated. We produce a suggested order report that looks at your stock levels and your sales activity for the near term in previous years to suggest order quantities for each item.
Getting a good handle on this will help you stock only what you need, without running out of stock and losing sales. This will help you save money and headaches every month.

When to order? Well, this is a little more subjective, but it is tied to inventory turns and inventory value. If your inventory is comprised of high value, low volume items, you probably can get away with ordering less frequently than others, say every other week.
If your inventory is very high volume, you probably need to order regularly. Some vendors, such as liquor and beverage distributors, typically ship every day because the product mix turns over very rapidly and it's not practical for a small retailer to store a week to two worth or inventory.

Other questions to ask include:
Does your vendor offer shipping discounts for orders over a certain size?
Does your vendor have periodic rebates or specials?
How much room do you have to store inventory?

Carefully reviewing the answers to these questions can help you decide when and how much to order.

This is a decision you have to make for yourself, but combined with understanding what to order, it can help you reduce your workload in managing your inventory, and it will reduce your carrying costs as well.

Related Articles
 
  Don't Overlook This Powerful Method For Ending Your Sales Letters.
  How To Upsell And Increase Your Sales Using This Shopping Cart Tip
  Press Release Key Components: Who, What, When, Where and Why
  The 'Being Efficient' Myth In Sales

Article Tags: backorders, desk, fear, headaches, inventory control system, money, previous years, product changes, quantities, relationship, right time, stock levels



Related Forum Posts
LEADERS - L- Loyal E- Eager to learn and serve A- Active D- Delegate E- Efficient R- Reliable S- Smart


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Tweet

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

An Intelligent Contact Sheet

How to Write Your Articles for Better SEO

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.