5 Tips to Optimize Your Inventory

Inventory is simply cash sitting on your shelves. If it moves too slowly, your cash flow dies. If you run out of it, you lose customers to competitors. Balancing this is the art of inventory management.

1. The First-In-First-Out (FIFO) Rule

This is crucial for perishable goods (like cafes) but applies to hardware too. Ensure older stock is sold before newer shipments. This prevents expiration and obsolescence.

2. Identify Your Best Sellers (The 80/20 Rule)

Typically, 80% of your revenue comes from 20% of your products. Do you know which ones they are? Focus your capital on keeping these items in stock.

3. Set Reorder Points

Don't wait until the shelf is empty to order more. Determine a minimum quantity for each item. When stock hits that level, place an order immediately.

4. Regular Audits

Even with software, physical counts are necessary to catch theft or damage. Schedule a 'stock-take' at the end of every week or month to reconcile your physical stock with your system numbers.