Inventory is money in the retail business. Retail stores hold inventory, so it important to make sure the entry and exit of it are closely monitored.
Receiving inventory efficiently is the first step towards successful inventory management. Any error in this step can have a cascading effect on the future management of the inventory. Therefore it is a small yet the most important part of inventory management
Whether it is for online, wholesale or off-line retail, it is important to follow a proper process to inward the received quantity.
Why is receiving inventory procedure so important?
Inventory receiving is very important because if you make a mistake in this step all the subsequent steps will not be effective nor will you be able to track any of the inventory metrics in a meaningful way.
When a firm receives the right quantity of inventory at the right time, only then can the further steps of inventory control be effective. Thus by optimizing the inventory receiving process, you will easily be able to meet your inventory KPIs (Key performance indicators), reduce the cost of inventory and streamline your stock management.
Inventory Inbounding Process
A process for receiving and inbounding your fresh inventory is important. Make sure the process is understood by all the personnel involved in the stock receiving.
Below I have listed four detailed steps which will make this process easy, fast and efficient.
Verify the goods received
It is important to double-check the inventory received so that we can avoid unaffordable mistakes later on. To avoid situations like overstocking or shrinkage it is essential to check the quantity of the stock that you have received.
Given below is a list of the things that should be verified:
- Quantity received: To avoid consequences of over storage or deficit of inventory one should check the quantity of stock received.
- Description of goods & Product code: It is import to verify that you have received what you ordered. Every product has its own cost. Thus before receiving the inventory, you should match the product code and description to make sure the right inventory is updated for the right product.
- Condition of the goods: You would do not want to sell damaged goods. Therefore it is a must to check the condition in which you have received the inventory
- Batch tracking number: This number helps you track the batch from its creation to its final shipment. This enables continuous monitoring of the Inventory. Batch tracking also helps in tracking stock aging accurately.
- Serial code: Serialization is the process of assigning a unique number to each item in inventory. Serialization makes it better to track inventory and also keep track of inventory batches. Serialization ensures every item in inventory is accountable from receiving to dispatch.
2. Blind receiving
One of the easiest ways of accurately receiving inventory is blind receiving. In this process, the receiving team is not concerned about how much stock is supposed to be received. They just take a physical count of the received inventory segregating the inventory by SKU as they take the count. Then the count is matched against the purchase order or delivery challan to cross verify.
Barcoding is a process of sticking a barcode label on the product. For small-scale businesses it usually identifies the SKU. Barcodes can be scanned using a barcode reader. Barcodes increase the efficiency of operations and help in improving the onboarding and fulfillment process. An important part of a barcode inventory system is the hardware. The right kind of hardware makes a lot of difference. Nowadays you can even use your mobile camera as a barcode scanner.
4. Accurate tracking of inventory
A cloud-based inventory management system is required for this process. This process needs to be planned carefully. Goods need to be tracked from the moment they arrive in the warehouse to the final shipping that is the consumers. An inventory management system helps you to avoid stockouts, improve your stocktaking process to avoid continuing errors. It also helps in managing multiple warehouses easily.
Inventory Holding Cost
While we discuss inventory, we should understand the inventory holding cost. This is the cost of capital used to purchase and hold the products in inventory. The inventory carrying cost depends on the number of days an item staying in inventory.
A process for stock inbounding
Create a clear written process for what should be done when fresh inventory is received. It is important to document the process so that everyone is clear about their responsibilities.
Making sure that the inventory is counted, verified and inspected before it is put away for storage is important. If you do not count the inventory that you received, you could end up with ghost stock without any documentation to verify its existence.
Make sure the entire steps of the inventory inbounding process are audited and records are maintained for future reference.
Implement a cloud-based inventory management system. The inventory system should support basic batch tracking. Batch tracking helps you track which batch every item in inventory belongs to. Batch tracking can also be used to track the inventory aging and know the inventory days in stock.
Easyops inventory management comes with built-in batch tracking which helps you track your inventory holding cost using either FIFO or LIFO methods. For more advanced inventory management you can enable serialization for accurate inventory control.
Now it is your turn! What are the different ways that make receiving inventory easy for you? Do let us know in the comments section below. And if you think this article was helpful, do give us a thumbs up!
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