How can you reorganize your sales and purchasing processes as well as your inventory management to ensure your business goes the distance?
The current global health crisis has had a number of economic consequences that are sure to cause major changes in the way we consume and distribute goods.
In these difficult times, entrepreneurs & SMBs often find themselves on the front lines. Reduced activity, supply issues, cash flow problems – entrepreneurs have a number of obstacles to overcome.
This said, the strength of a small business lies in its ability to adapt. Though the coming months may be difficult, speed, professionalism, organization and creativity will help your business become more resilient in these difficult times. Times of crisis can also be times of new opportunities.
Some businesses are more affected than others, depending on their sector and distribution model. Most governments have implemented measures to help everyone get through the emergency.
The next step is to revise and update your operations and methods with a comprehensive analysis of your business. For businesses selling goods, there are things that can be done to help improve sales models, streamline the customer/billing cycle and inventory management, and make the most of new opportunities. With this in mind, we have identified some best practices to maximize your chances of weathering the storm and bouncing back as quickly as possible.
Inventory management is even trickier in times of crisis, making it a key area for change. Whatever the size of your business or your sector, don’t underestimate the impact of good inventory management and optimization.
Here are a few recommendations that you can implement quickly during this period:
• If you haven’t created your stock keeping units (SKUs) yet to ensure better traceability, now is the time! Creating product categories can also help with your analyses (e.g. accessories, clothing, organic, etc.).
• Setting up a barcode and scanner system could also go a long way toward speeding up your ordering process.
• Finally, if you have a big enough warehouse or storage area, why not create bin locations to make it easier to process products for shipping?
Once the economy is back on track, the way you handle sales will be more important than ever for your business getting back off the ground swiftly and efficiently.
Reviewing your sales and order processes means:
• Reducing the risk of mistakes and maintaining good customer relations
• Improving profitability and productivity
• Saving time and getting back to your business’ core activities
• Bringing money in faster
How to go about it? Here are a few things that are easy to put into practice:
• Offer goods on consignment: with this system, a vendor can offer your products in their store, but they only pay you once the products have been sold. Your products get better exposure and it is less risky for your customer to offer your products.
• Deploy some marketing strategies: add some bells and whistles to your products to make them more attractive and competitive. Promotional offers, and attractive packages such as a batch with a free gift or a kit with a free POS display, can also facilitate sales.
• Try out new distribution channels: omnichannel marketing is particularly beneficial during a crisis as it helps diversify your sales methods. Consider new ways of selling: e-commerce, trade shows, sales representatives, clearance outlets, stores, pop-ups, marketplaces, etc.
• Create detailed sales reports: identify the best distribution channels, sales outlets, sales representatives, customers, products... In short, take a look at your key performance indicators so you can concentrate your efforts in the right place, at the right time.
• Adopt tools that are user-friend and that will help your employees become more efficient and better serve your customers.
• Train your team in the best sales practices using mobile devices.
• Create a centralized workspace for each employee with personalized access to their data.
Inventory plays a critical role in the longevity of your business. As we explained above, it eats into your liquid assets and increases your WCR. It is therefore essential to manage your purchasing to optimize your stock levels and costs. But this doesn’t mean you should stop buying - being under-stocked could result in lower sales and unhappy customers when you go back into business.
Here are seven recommendations for improving your purchasing of goods during the crisis and post-crisis period:
• Calculate your reorder point: often used with the just-in-time model, the reorder point method consists of defining a certain stock level for each product which once reached will trigger a reorder with your supplier.
• Create notifications for when stock levels get too low: if you use inventory management software, you can program alerts to notify you when your stock levels get low. You can then place an order with your suppliers.
Now is the time to take action to ensure you survive the crisis and help you get back on track faster once it is all over.
Now, more than ever, your cash flow is the key to your success, so you need to monitor your WCR (working capital requirement) closely. Make sure you don’t tie up too many resources in your inventory, which is the biggest threat to WCR for trading companies. Inventory and order management software will help you manage and monitor your inventory efficiently and accurately.
Handling customer receivables and supplier payables is also essential for optimizing your WCR. Choose your suppliers carefully and organize your purchasing. On the customer side, automating your order processing and incoming payments will improve your order to cash process, so you will be paid quicker. Vital for a healthy cash flow!