Inventory management is an essential operational process for furniture retailers that affects cash flow and growth. As a furniture retailer, your number one priority is to have the right stock at the right time and avoid tying up cash on slow-moving products. In this article, we’ll discuss some best practices for inventory management that successful furniture retailers have adopted to grow their businesses.
Why do you need to step up inventory management?
Traditional inventory management using spreadsheets is no longer an option because they are time-consuming and prone to errors. Manual processes such as hand-counting items to perform a cycle count and updating inventory levels on a spreadsheet are simply not efficient. Without access to reliable data and reporting tools, you risk making poor decisions that can hurt your business. Using inventory management software can help you scale your furniture business by giving you the tools you need to automate this critical business process and set up your team for success.
Inventory best practices for furniture retailers
Here are a few ways to gain control over your inventory:
#1 Save space using the ATO strategy
Assemble-to-order (ATO) is a business production strategy where you assemble a product after a customer places an order. This strategy typically requires that components of the product are already manufactured but not yet assembled. The ATO strategy works exceptionally well for bulky products such as sofas and tables that consume a lot of warehouse space and cost a fortune to ship.
#2 Adopt a real-time inventory system
Managing inventory with a cloud-based system can make tracking inventory significantly easier and increase accuracy. Modern inventory management software enables you to make better decisions with real-time stock movements and inventory performance. Perhaps the most substantial benefit of using an inventory system is that it lets you track every item from procurement through production. The growing popularity of eCommerce and marketplaces has made it possible for furniture retailers to sell their products globally. In this context, a cloud inventory system is essential for every furniture retailer looking to sell their products across multiple online channels.
#3 Build a transparent supply chain
The modern enterprise collaborates with multiple manufacturers and suppliers to produce and sell products. Managing a complex supply chain while keeping costs under control and quickly adapting to demand fluctuations can be daunting without a transparent supply chain. Maintaining close communication with suppliers is critical to improving supply chain visibility in the furniture industry. In addition to having visibility into your supplier’s schedule and lead time, you also need to increase your supplier’s visibility into your operations and expectations. The best way to achieve this is to be transparent about your requirements and expectations with your suppliers. Scaling a business is a lot easier with robust vendor relationship management and a transparent supply chain.
#4 Stock the right items
A common mistake the average furniture retailer tends to make is not having the right amount of inventory. By not having enough inventory to meet customer demand, you risk losing business to your competitors. On the other hand, having too much inventory means restricting your cash flow by tying up capital to inventory. Undoubtedly, both understocking and overstocking are not ideal scenarios as far as business owners are concerned. The only way to avoid such situations is to get better at demand forecasting. Taking the guesswork out and using a data-centered approach to reordering can help eliminate overstocking while still meeting customer demand.
AccelGrid for furniture retailers
Use the steps above to move from outdated inventory management tactics to modern approaches to accommodate your inventory needs. Implementing robust inventory management software for your furniture business can bring several benefits and help you increase your bottom line. AccelGrid offers cloud-based inventory solutions with real-time insights so that you can automate mundane tasks and make better decisions. Talk to one of our experts today to find out more or start your free 14-day trial.
