Inventory Control will help your bottom line

Doe’s your backroom look like this? How much money could you be losing with a backroom like this. If your business is small, large or a home business you can benefit from having less Inventory of Merchandise or Supplies on hand. It can not only improve your Gross Profit but also lower your labor and more. Here are five areas that can be improved by getting control over your backroom.

1. Increase Gross Profit

When you have a lot of Inventory things seem to get damaged the more you handle it. By reducing your damage you increase your Gross Profit. Also by having less Inventory on hand you are able to take advantage of last minute deals that are at a great cost.

2. Labor Savings

The best way to make money on what you buy is to handle it once, when it comes in and it fit’s right on the shelf. But if part of the case comes to the backroom and you have to handle it again it adds to the labor you have in the item and reduces your profit. If you could have a giant scoreboard in the backroom that would add up the labor cost each time you handle a item more than once it would make you think twice of having excessive back stock. I had one department that got there inventory down and the department manager said they saved 10 hours a week. If the average employee wage was $10 an hour that is $100 per week or $5,200 per year in just one department by reducing there inventory in the backroom. Imagine if your store had 21 departments.

3. Improve Moral

With less inventory for your employees to dig thru in the backroom the happier they will be. It will be easier for them to get their job done and they will in turn be able to focus more energy to giving great customer service and improving sales. I recently had an employee say how nice it was to work in there department now that the back cooler was so low of Inventory on hand. Happier employees are more productive and work harder also.

4. Lower Expenses

Not only you would lower your labor expense by having less Inventory on hand like the above example of the department saving $10 a week but if you rent an outside storage unit you can save on it also. I have worked at a store that rented three outside containers, each one cost $89 per month. That is $267 per month or $3,204 per year. Every dollar saved on your expenses goes straight to the bottom line.

5. Free up Money

If you have 200 locations in your chain and each location reduces there inventory just $10,000 that would free up $2,000,000 that you could use towards new locations or remodel your current locations. If you are a sole business owner you know the importance of not having money laying around not working for you.

Sometimes the best way to get it in control is to have one person approve any purchases that doesn’t fit on the shelf. It is like going on a diet from ordering and selling what you currently have on hand. Inventory control is one of the best ways to add to your business net profit.

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