Purchasing needs to align with demand. Using Pareto 80:20 principle, you should invest mainly in the 20% of products that reap 80% of the profit.
Efficiently restock products that sell
When you identify items that sell easily, restock them more regularly with a reasonable average inventory. Don’t overstock by buying huge quantities at once. This way you can order new stock before the current one gets sold and your business can run smoothly without excess inventory.
Plus, ordering stock more frequently will give you a stronger bargaining power with suppliers, even in small quantities. Remember to negotiate with vendors to see if you can get a better deal. Successful negotiation can lower your cost of goods sold, and in turn, affects your inventory turnover measures positively.
Eliminate products that sell poorly
For slow-selling products that occupy a large space in your inventory, try different solutions to move out the old stock quickly. For instance, you can offer special discounts and promotions to customers or launch a special marketing campaign aimed at moving outdated stock.
After that, if you still have a low inventory turnover, consider reselling your extensive goods back to your suppliers at a discounted rate. Some suppliers will accept the goods if they can buy them at a discounted rate and sell on to other retailers later. This will help you to get rid of excess stock and improve your inventory turnover rate.
4. Boost marketing and sales activities