inventory optimization

How to go about Small Business Inventory Optimization


Starting a small business in a market niche has become one of the most common practices in the entrepreneurial world but one thing that seems lacking is how those businesses go about their inventory optimization.

For every business just starting, most often than not there are always loop holesto fill mostly due to unavailability of resources in terms of expertise, funds, labour and so on but knowing how to effectively manage the limited available commodities present can be a boost in the growth of such a business.

Hi everyone my name is Timileyin and in this post i will be discussing about how to optimize your resources in terms of your products as a small business.

Let’s understand what the main subject is about.

What is inventory optimization ?

This is a process designed to make the best use of limited products at minimal costs that will generate a maximum result.

It’s also employing strategies that produce the right quantity of products at the right time at an optimal cost.

Going about your business activities without having any plans for optimizing your resources will only lead to either you spending too much or not spending at all.

How business costs are affected by inventory optimization

Having known the basic definitions of what inventory optimization is, it is also important to know how your business costs are affected by it.

Knowing the right optimization strategy will definitely help your business in managing costs well and there won’t be any wastage but without any inventory optimization or a badly done optimization, there will be losses to record for it.

Take for instance a fruit juice business requested for a certain number of fresh fruits to be used and eventually the fruits weren’t delivered in time or the delivered products were not up to the amount requested, that gap in terms of the time wasted and shortage of resources will have a negative effect on the production index of the business and will consequently affect it’s cost.

If the fresh fruits happened to be in excess, there will also be wastage in terms of the excess money that will be used to process those fruits and also the funds that will be used for storing them.

How to make the best use of your inventory?

1. Execute the just-in-time delivery

This strategy is one of the most efficient ways of optimizing your resources and it’s achieved by ensuring that you have your resources delivered at the right time they are needed.

It helps a lot because it takes out the cost of storage and maintenance.

2. Having an alternative warehouse

To go about this, most small business set up turn their structures into warehouses in which they lease their spaces for vendors as demanded.

3. Have a close relationship with your vendors

To fully optimize your inventory stock, you need to have  a personal relationship with your vendors as this makes their commitments to be more solid and also to deliver when due.

Having online platforms is good but for a more effective approach, it’s best to go personal.

4. Give incentives to your employees

As a small business owner, you can talk to your employees telling them to bring up ideas on how to further save money and cut costs while making sure that you satisfy your customers optimally as well.

Encourage  your employees to bring up ideas that can be of help to your business, ensure to also reward them for those ideas.

This will motivate them further to working those ideas to fruition.

How to know if you need to optimize your inventory?

The following tips i’m about to give now will help you know which of your businesses to optimize.

If your answer is in the affirmative then yes.

  • Do relevant products finish early enough and you bring in previous goods to replace them?
  • Is there a structure ready provided your supply chain collapses?
  • Do you get goods and services from a variety of suppliers?
  • Would you save money by purchasing products from another geographical location?

Reaf, practice and share


Komolafe Timileyin is a passionate entrepreneur that loves to solve entrepreneurial issues. He is also a blogger and an upcoming Engineer.

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