Running a print shop isn’t solely about selling your goods and services to customers. With all the supplies and materials you need for your decorative printing services, you’ll need to store them and manage your stock levels consistently. How you manage your inventory can depend on many factors: how do you store your inventory, for one? What kind of scale do you operate on? How much space will you need for current and future requirements?
Successful inventory management can be an essential part of your business. It ensures you have the stock you need for ongoing orders and have new stocks ready to order when you’re low. You’ll be able to stay ahead of your orders, forecast demand, and better control your business’ bottom line. If you’re wondering how to get it right, we’re here to help!
- Methodologies to Inventory Management
- Handling your Inventory
- Anticipating Demand
- Other Things to Keep in Mind
Methodologies to Inventory Management
There are two ways to tailor your inventory management strategy: the just-in-time (JIT) or the just-in-case (JIC) approach.
A “traditional” inventory management system, JIC is a proactive approach where you always have stock to spare. This method is more responsive to sudden demand and unprecedented complications as you’re always prepared for the worst-case scenarios and well-stocked “just in case.” As such, it gives you plenty of room to work with during sales booms since you’ve got a lot of inventory ready to use.
This can be especially useful if you use materials or supplies that are harder to come by or don’t have many substitutes. You also won’t need to worry about supplier issues that crop up occasionally since you’ve got your bases covered in advance. That can help put you ahead of the competition while they struggle with high demand and low supply.
For most print shops, JIC makes sense because order sizes can get pretty big, and you’ll need a lot of blanks, inks, and other materials to meet that demand. Because of this, it’s ideal to have extra stock available to quickly cater to growing demand without worrying about running out of the needed materials.
It’s not the most sustainable method as you prioritize preparedness over concerns of holding so much stock in reserve. You can incur higher holding costs over time, and during slumps in sales, you’ll end up with a lot of inventory sitting idle. You might also be wasting effort holding on to certain seasonal or popular items during short-lived booms of certain trends.
As the name suggests, JIT involves ordering inventory only as and when it’s needed. You’ll replenish your supplies and materials as they are used, and you can be more sustainable with your overall inventory consumption. JIT requires you to be able to forecast demand as it comes and to then use that information to stock up “just in time” for the orders to be started.
JIT’s success stems from these early, accurate predictions of supply and demand changes to your business. When you forecast a potential rise in sales, you’ll place a new inventory order to meet that incoming demand (and not a moment later). Similarly, a forecasted slump in sales means there’s no need to order anything or simply a small order to replenish existing stocks for regular or ongoing orders (where needed).
JIT allows you to use your finances better and divert it to wherever it’s needed for your print shop’s growth or improvement instead of banking it solely for your excess inventory. You’ll also be able to craft a highly efficient inventory management plan, removing non-value-add processes and streamlining the entire workflow.
JIT can be put to good use by print shops that cater to a specific niche and doesn’t have a particularly large demand. They simply need to monitor sales trends, make accurate predictions for the next purchase order, and place the order when the time is right. They also need to order in exact quantities to minimize waste and keep costs low.
The resulting strategy helps with balancing production with your overall inventory levels while only holding on to inventory that’s required for orders you have on hand. It’s especially effective when you have reliable suppliers, strong supply chains, and minimal disruptions. With the Covid-19 pandemic, however, JIT users faced numerous supply chain disruptions and other challenges that dented company earnings and available inventory.
Outside of the pandemic, JIT also struggles to keep up with a sudden surge of demand which can drain the current inventory available. It can make it very difficult to keep up with this wave of demand, and you could lose potential customers in the process.
Handling your Inventory
How do you store and manage your inventory? Having the right inventory management plan makes it easy for you to know what you have on hand and what you need to replenish when needed. This way, you’ll ensure that you have the right inventory available at the right time, ensure it’s used to its fullest, and keep ahead of inventory movement to minimize storage costs and other related expenses.
If you don’t carefully manage your inventory movement, you’re bound to have issues of stock getting misplaced or lost, which can cause unwanted delays in your printing work. If you keep your inventory in your shop’s storeroom, do you have a system to keep everything organized? Or do you use a warehouse instead and have a warehousing team sort everything out for you?
You’ll need to put a lot of thought into staying on top of your inventory and order requirements. Here are some tips to help you do just that.
First In, First Out (FIFO)
The FIFO principle prioritizes using old inventory before getting to the new ones. This is usually done to prevent old inventory from getting damaged or becoming out-of-date with current apparel trends. Doing this ensures you always use your inventory and stock you’ve bought early on. You’ll be able to progressively phase out older inventory, preventing issues where you have too much X and demand for it has all but evaporated.
Older items can easily be placed in the front, while newer items go in the back. As older items are consumed, the newer items slowly shift closer to the front before they’re finally used. If you also find inventory that hasn’t been moved much, maybe due to waning popularity, you could consider getting rid of it by selling them during special promotions.
The ABC priority method is an alternate method to the FIFO principle. A-ranked items are “big ticket” items with small numbers but a high consumption value (higher inventory storage costs), while C-ranked items are low-cost items that move quickly. B-ranked items are the middle ground between the two.
For example, screen printers might categorize their premium inks as A-ranked items, while the shirt blanks commonly preferred by customers are the fast-moving C-ranked items. This helps you to categorize your supplies and materials by how essential they are to your print shop. It also helps you maximize your profitability and move your inventory faster than usual.
It might seem obvious, but keeping tabs on your inventory is not just the only essential to consider. Given how supply chains can face unexpected disruptions, having contingency plans in place can ensure you won’t be hit hard when unexpected changes can quickly occur.
As it is, it can be tricky to balance your inventory needs and the potential demand for your goods and services. Unfortunately, there’s no universal approach to managing your inventory, even among practitioners of either JIT or JIC. JIT can get into trouble when demand isn’t accurately predicted; JIC falls short when the excess stock tucked away in storage can’t move because there’s no demand. Thus, you’ll need to be adaptive to how quickly things can change overnight.
Take what happened during the pandemic, for example. With people stuck at home due to movement restrictions, casual clothing surged in popularity. If you had been profiting from custom sportswear or activewear before that, you’d either have to find a way to sell off the polyester jerseys you have remaining. Otherwise, if you’re running out of space, you might have no other choice but to get rid of them to make way for new inventory.
With a solid management plan in effect, you’ll be able to keep track of your overall inventory movements effectively. Consider having par levels or safety stock amounts, so you always know how much you’ll need at minimum to keep up with demand. It will take a few tries to get the numbers right, and they will still need further adjustments from time to time (based on seasonality, for example).
Vendors and Suppliers
It goes without saying that having good relations with your vendors and suppliers can go a long way to helping out your inventory situation. Good communication and being prompt with your payments aren’t just about being nice or getting good deals from them. With proper communication, you can inform them well ahead of any promotions you plan and give them ample time to prepare your stocks. Getting to know them and their processes, and working out how to work together with them, can also foster greater trust between you and your suppliers.
Having a good network of suppliers and vendors to work with you is in itself a major advantage not just for you but for them, too. Treat them as key partners in this endeavor, and everyone wins. You’ll never know when they might be able to help you in a pinch.
The stock take is a crucial part of inventory management to ensure you have sufficient stock for the coming months or promotions ahead. Having monthly, weekly or even daily checks of your most performing goods or services will ensure you stay ahead of your shop’s overall consumption of supplies and raw materials. You can also identify your older stock and be able to make use of them for future promotions if you plan on getting rid of them.
Not having frequent (or at least occasional or pre-sales season) stock takes is a recipe for disaster indeed. You won’t be able to tell that you’ve run out of blanks or even a specific ink color until the day comes and you realize you’ve run out. And if your supplier doesn’t have it available, you will be in trouble!
Consistency is Key
At the end of the day, you need to be consistent at every point of the inventory management process. It might be in the way you track your inventory, receive new stock, or how timely you pay your suppliers. Maintain that consistency from start to finish, and you won’t be disappointed with the results.
With how inventory management software can help you simplify the tracking and organizing of all your inventory without needing multiple spreadsheets of data to sift through, choosing the right one can make a big difference. With YoPrint, we’ll be able to help you streamline your inventory management process in no time!
If you’re keeping your inventory in multiple locations, YoPrint can easily keep track of everything. You’ll be able to view all your inventory across all these locations and easily keep track of stock transfers between locations. You can even perform a stock take when needed and make the updates through YoPrint, which are promptly reflected in the system.
As YoPrint also helps track your current orders, YoPrint allows you to see which of your items need a restock. YoPrint shows you all the (updated) information on your available, on-hand, incoming, and committed stock. You’ll then be able to see what you’ve received and be able to keep track of when they were received. YoPrint will also be able to recalculate your reorder amount depending on all these changes; we make it simple for you!
We also make the purchasing order a lot easier, too. Every purchase order you make has a shareable link you can send to vendors. They’ll be able to view not just the purchase order but also attached files and other important information related to it. Prefer communicating with them instead? Send them a message through YoPrint – it’s that easy.
Not only that, but YoPrint also has integrations with S&S Activewear, Sanmar, and even Alphabroder, to name a few, giving you access instant access to thousands of products under these brands. You also can view real-time pricing and stock availability from YoPrint, saving you plenty of time to get your quotes right.
Now comes to the tricky question of how you’re supposed to forecast your inventory. There’s no exact science to doing it. Still, there are guiding principles that can help you make good predictions that can serve you well in effectively (and efficiently) managing your inventory.
JIT practitioners particularly need good forecasting abilities since they only restock as and when needed, compared to the “stock up just in case” mentality of JIC users. However, forecasting can still benefit JIC users as it can make knowing what inventory needs to be stocked up easier.
So why do you need to forecast demand?
- Ensures your print shop can keep up with growing demand
- Reduces your financial burden on holding inventory
- Keeps your print shop working and strategizing to great effect
The simplest way to go about this is to look at past trends. You’ll be using historical sales data (basically, any data about your sales, profit margins, bestselling items, and so on) to identify these trends and then leverage it to make predictions about future demand. You might use simple formulae to calculate predicted demand in future periods, such as the moving average.
Moving average = (Sum of data points over the past n periods) / (number of periods)
Where possible, finding out more about how your competitors are doing can also prove beneficial. You might learn what other trends are popular and can use that to good effect in preparing for future sales, either by following their lead or offering something unique as an alternative.
Note that you can’t accurately account for seasonal effects and unexpected changes that can happen in between. As a result, you could potentially run into issues when supply chain issues or other problems arise without warning. Or you could miss out on a new fashion trend that boomed when your predictions were for a totally different type of product or service.
Offsetting this difficulty requires ample foreknowledge, which can be addressed by keeping tabs on the news, paying attention to trend changes, and using proven analytical methods to help with your forecasting. At the same time, you can’t put too much pressure on trying to account for every single factor; the least you can do is to be as prepared as you can.
You can also consider setting a “safety stock” amount, where if your inventory goes below this amount, you’ll know it’s time to replenish your stock. This ensures you’ll always have stock available but can compensate for times when your inventory predictions don’t work out due to extenuating circumstances.
Other Things to Keep in Mind
There are other factors you’ll need to consider when planning out your inventory needs.
Bulk Buy Discounts
Where does bulk buying come in where your print shop’s inventory is concerned? By ordering the “optimum amount” needed, you can make bulk order purchases and not “tie up” money in unnecessary inventory. You’re saving money on both your purchases and inventory storage.
Bulk buy discounts mean you can save more with every purchase. However, overbuying stock and ending up having to dispose of any excess stock is still a waste of cash – cash that could’ve been put to better use elsewhere. It’s all about maximizing efficiency and profits.
Lead time is how long it takes you to complete a customer’s order from start to finish. This includes the time your purchase orders arrive and how long you can complete the customer’s order. Shorter lead times are ideal, of course, as it means you work fast and deliver on time.
Keeping a short lead time requires you to know how to streamline every aspect of the customer order. This can mean knowing your suppliers’ lead times – how fast they can deliver goods to you – and planning around that. If your suppliers’ lead times are short, that’s good news. You’ll need to factor that into your workflow if it isn’t. It could mean needing to order your stocks well in advance or adjust your forecasting.
How much space do you really need? As a print shop owner, it can be tempting to want to answer that with “Yes,” but the reality is that you can’t have all the space. Some print shop owners make do with a store room in their shop, but its size depends on the kind of services they provide and the scale of customers they serve.
Meanwhile, larger print shops will need a warehouse to track and store all the necessary items for their business, while commercial printers can have multiple warehouses. When you’re thinking about your storage needs, you’ll have to be aware of how much you need to adequately meet demand on time and not incur extra costs for holding all that inventory.
It bears reminding that your inventory holding costs will increase the more you have to store. It isn’t just a one-time fee, after all: you’re renting the space, you might need to purchase insurance for your inventory, and there may also be other associated fees to pay for as well. You inevitably incur more losses the more you store and for however long you need them.
How far is your shop from the warehouse where your inventory is kept? That also can be a critical factor in your lead time. If you only keep a select amount in your shop, you’ll need to be able to get more out to the shop from the warehouse once you reach the safety stock amount or if you predict an upcoming boom in a fashion trend. You wouldn’t want a traffic jam or a mechanical fault in the delivery truck to end up stalling your production.
Managing your print shop’s inventory allows you to use your supplies and materials to maximize your profitability while minimizing costs. With careful planning and a good plan in place, you’ll be able to consistently meet the growing demand for your print services uninterrupted. While your competitors might be having difficulty getting through supply disruptions and low inventory levels, your shop will be performing very well with the orders you’re taking.