Get your inventory management smarter

This course helps small and medium enterprises in Nepal implement effective inventory management systems to:

• Reduce waste and overstocking
• Prevent stockouts and missed sales
• Improve cash flow and decision-making

1. Understanding Inventory

Advertisements

1.1 What is Inventory?

Inventory refers to the goods and materials a business holds for the purpose of resale or production.

1.2 Types of Inventory

• Raw Materials – Inputs for production (e.g., fabric, spices)
• Work-in-Progress (WIP) – Items partially completed
• Finished Goods – Ready-to-sell products
• MRO Supplies – Maintenance, Repair, and Operating Supplies (e.g., tools, packaging)

1.3 Why Inventory Management is Important

• Frees up capital tied in unsold goods
• Reduces waste and theft
• Helps meet customer demand consistently
• Essential for VAT, PAN, and audit compliance in Nepal

2. Common Inventory Challenges for Nepal-Based MSMEs

• Overstocking due to inaccurate demand estimation
• Tracking stock manually or from memory
• Spoilage or theft in storage
• Seasonal demand fluctuations
• Lack of organized storage
• No integration between inventory and sales records

3. Inventory Management Methods

3.1 First In, First Out (FIFO)

Sell older stock first to avoid spoilage or obsolescence.

3.2 Economic Order Quantity (EOQ)

A formula to determine the ideal order quantity that minimizes inventory costs.

3.3 ABC Analysis

• A items: High value, low quantity
• B items: Moderate value and quantity
• C items: Low value, high quantity

3.4 Reorder Point System

Set minimum stock levels that automatically trigger reordering.

Example: If sanitizer stock falls below 10 units, reorder 50 units.

4. Setting Up an Inventory System

4.1 Manual System

Use notebooks or registers. Include:

• Date
• Product
• Stock In
• Stock Out
• Balance
• Remarks

4.2 Spreadsheet-Based System

Use Excel or Google Sheets with columns for:

• Product Code
• Product Name
• Opening Balance
• Purchases
• Sales
• Closing Balance
• Location or Shelf

4.3 Digital Tools for Nepali MSMEs

• Tigg – Accounting and inventory
• Khatapana – Stock and ledger in Nepali
• SmartBiz – POS and inventory management
• Google Sheets – Free and customizable

5. Stock Counting and Audits

5.1 Recommended Frequency

• Daily: High-turnover items
• Weekly: Perishables
• Monthly/Quarterly: Non-perishable bulk stock

5.2 Tips for Effective Stock Counting

• Count during non-peak hours
• Use printed or digital checklists
• Assign stock checks to trusted staff
• Compare physical count with records

6. Integrating Inventory with Sales and Purchases

• Record all purchases and sales promptly
• Connect stock records to POS or billing systems
• Analyze sales trends to forecast future needs
• Monitor for shrinkage and losses

7. Storage and Inventory Safety

• Clearly label all stock (product name, batch, expiry)
• Use shelves or pallets to avoid ground contact
• Ensure good lighting, airflow, and pest control
• Keep high-value items locked or restricted
• Separate damaged or returned items from saleable stock

8. Seasonal and Demand-Based Planning

• Anticipate peak seasons: Dashain, Tihar, tourist season, school year
• Review past sales data to predict future demand
• Avoid over-ordering before low-demand periods

9. Key Inventory Metrics to Track

10. Sector-Specific Inventory Tips

Retail

• Group items by category (e.g., electronics, clothing)
• Use basic barcode systems if possible
• Bundle slow-moving with popular items to improve clearance

Manufacturing

• Track raw materials and finished goods separately
• Monitor work-in-progress inventory
• Maintain minimum buffer stock to avoid production halts

Final Tips

• Begin with simple tools—even a notebook is better than no system
• Review inventory weekly or monthly
• Train staff on how to record stock properly
• Track best- and worst-performing items regularly
• Use stock data to make smarter purchasing and marketing decisions