Why Inventory Management is Critical
For most retail businesses, inventory represents 60-80% of total assets. Yet most small retailers manage stock through memory, WhatsApp, and paper registers. The result: stockouts that lose sales, dead stock that locks up cash, and no visibility.
1. Use ABC Analysis
Divide inventory into three categories:
- A items (top 20%, 80% revenue): Monitor daily
- B items (next 30%, 15% revenue): Review weekly
- C items (remaining 50%, 5% revenue): Review monthly
2. Set Reorder Points
Formula: Reorder Point = (Average Daily Sales × Lead Time) + Safety Stock
Example: Sell 10 units/day, supplier takes 5 days = 50 units reorder point (plus 10-20 safety stock).
3. Track Stock in Real Time
Weekly counts are too slow. Real-time tracking where stock deducts automatically on invoicing gives accurate visibility.
4. Identify Dead Stock Early
Dead stock is inventory unsold for 90+ days. Signs:
- Zero sales in last 30 days
- Stock value higher than 3 months of sales
- Seasonal products after season ends
5. Use Batch and Expiry Tracking
Essential for food, pharma, cosmetics. Enables FIFO, expiry alerts, and product tracing.
6. Cycle Counting vs Annual Stocktakes
Count small portions weekly instead of disruptive annual counts. Count A items monthly, B quarterly, C annually.
7. Negotiate Supplier Lead Times
Shorter lead times = less safety stock = less cash tied up. Even reducing from 7 to 5 days helps.
8. Track Inventory Value
Know not just quantity but capital invested. Use weighted average cost method, review monthly.
9. Analyze Seasonal Patterns
Use 12+ months of sales data to identify Diwali, summer, monsoon, wedding season patterns.
10. Connect Billing to Inventory
When you create an invoice in InfiBis, stock deducts automatically. When stock falls below reorder point, you get alerts. No manual updates.
Conclusion
Good inventory management is about accurate, real-time data and acting on it. Start with ABC analysis, reorder points, and real-time tracking.