Properly sizing the stock you need for your business is not so easy as you may think, because you can slip into one of these two situations:
- If stocks are below demand: you will be unable to produce the goods for which there is demand; as such, you will lose time and most likely customers who will not be willing to wait. In addition, you may need to offer discounts to keep them, and this will translate into lower profit.
- If stocks are above the demand level, the surplus will generate additional costs, for storage, security, maintenance, insurance, etc.
The optimal dimensioning of inventories depends on the company’s experience, and can be accomplished by knowing the collaboration history with the business partners, as well as by forecasting the evolution of supply and demand, through mistakes and repeated attempts. Finding the best gift shop suppliers is important.
Here are some useful tips:
- Find suppliers close to your location so that they do not lose much time with the transportation of the products they supply
- Use a fast communication system with vendors, so that placing an order can be done and communicated quickly
- Use a good stock management application that allows you extract information in real-time
- Establish a procedure for the management of errors occurring during the supply – production – sales cycle; they are the ones that create most of the problems, so it is good to have an internal procedure to remedy them