Optimising stock management
Every day of ineffective inventory management is a direct financial loss. Out-of-stock merchandise wastes storage budgets, spoils or becomes obsolete, and a shortage of traded goods reduces revenue. Inventory optimisation can help avoid unnecessary costs, eliminate shortages and ensure stable profits. Sargona Private Capital Greece specialists shared their experience.
What is inventory optimisation and why is it needed
Optimisation is about balancing surplus and shortage of goods. Your goal is to minimise costs but still meet customer demand.
If you do it right, you will:
Why inventory ‘steals’ your money
2. Product shortages:
If you do it right, you will:
- Reduce storage costs.
- Avoid write-offs and spoilage.
- Increase profits through responsive customer service.
Why inventory ‘steals’ your money
- Excess inventory:
- You overpay for storage.
- Merchandise spoils, becomes obsolete, or loses relevance.
2. Product shortages:
- Customers leave for competitors.
- You receive negative feedback.
- Customer loyalty decreases.
How to avoid mistakes in inventory management
1. Forecast demand
Use data on sales, seasonality and trends. This will help you understand in advance how much and what kind of goods you need. Take into account promotions, weather conditions and competitor behaviour, and use analytical tools for forecasting.
2. Separate inventory by criticality
Not all items are equally important. Divide them into groups:
This will help you focus on the really important stock, recommend Sargona Private Capital's logisticians.
3. Adopt modern technology
Automation is your go-to wand in inventory management. Management systems (WMS or ERP) can help you:
4. Control inventory
Determine the minimum inventory level at which to place a new order. Take into account:
5. What to avoid
Use data on sales, seasonality and trends. This will help you understand in advance how much and what kind of goods you need. Take into account promotions, weather conditions and competitor behaviour, and use analytical tools for forecasting.
2. Separate inventory by criticality
Not all items are equally important. Divide them into groups:
- Critical (walk-in): items without which your business will grind to a halt.
- Medium Critical: items that bring in a steady income.
- Less important: items that are bought less frequently than the others.
This will help you focus on the really important stock, recommend Sargona Private Capital's logisticians.
3. Adopt modern technology
Automation is your go-to wand in inventory management. Management systems (WMS or ERP) can help you:
- Track inventory in real time.
- Reduce errors caused by human error.
- Respond quickly to changes in demand.
4. Control inventory
Determine the minimum inventory level at which to place a new order. Take into account:
- Lead time for order fulfilment.
- The average level of demand.
- The risk of a sudden increase in demand.
5. What to avoid
- Ignoring data: decisions made based on intuition often lead to losses. Analyse data to avoid unnecessary costs.
- Working with unreliable suppliers: delays and low-quality goods can significantly damage your business.
- Unjustified purchases: you don't need to buy goods in advance, just in case. This freezes capital.
1. Conduct an inventory audit from time to time
A regular audit of the current state of stock helps to identify:
How to proceed:
A regular audit of the current state of stock helps to identify:
- Illiquid balances: items that are not in demand and are just taking up space in the warehouse.
- Accounting errors: discrepancies between the actual quantity of goods and the data in the system.
- Expired goods: especially important for products with a limited shelf life.
How to proceed:
- Set up an audit schedule (e.g. once a month or quarter).
- Use checklists to check each product category.
- Use automated accounting tools (WMS or ERP) to speed up the process.
Practical steps to optimise inventory management
2. Analyse the causes of shortages or surpluses
A surplus or shortage of goods results in loss of money and customers. It is important to understand why this happens.
Causes of shortages:
Causes of surplus:
What to do:
Inventory is not just items on the shelves, it's your money that either works or burns. Sargona managers recommend establishing management now so you don't waste money.
A surplus or shortage of goods results in loss of money and customers. It is important to understand why this happens.
Causes of shortages:
- Improper demand forecasting.
- Delays in deliveries.
- Errors in inventory management.
Causes of surplus:
- Buying in advance without analysing.
- Reduced demand for certain products.
What to do:
- Analyse sales and demand data.
- Make adjustments to forecasting.
- Set minimum and maximum inventory levels for each product category.
Inventory is not just items on the shelves, it's your money that either works or burns. Sargona managers recommend establishing management now so you don't waste money.
Your wishes are our priority
© 2023 - 2025 All rights protected
