What are the key points for home furnishing enterprises to improve inventory turnover? As consumer demand becomes increasingly diverse and personalized and market competition intensifies, home furnishing enterprises face the challenge of managing inventory more efficiently to adapt to rapidly changing market demand. To help home furnishing enterprises respond better to this challenge, the following discusses the key points for improving inventory turnover.

1. Key Points for Improving Inventory Turnover:

Reduce monthly inventory value.

Increase the turnover frequency of each individual SKU.

Eliminate slow-moving products through selection and replacement.

Increase product sales revenue.

Strictly control the total number of SKUs in malls, departments, and sections.

Increase the speed of introducing new products.

Increase ordering frequency and adopt smaller, more frequent orders.

2. Solutions to Different Problems

How can store inventory be kept within the lowest possible range?

Based on monthly sales plans, the purchasing department should formulate a purchasing budget according to changing sales demand while ensuring normal sales and maintaining safety stock.

Increase the number of reasonable consignment or joint-operation counter suppliers in each department of the mall. Consignment or joint-operation products may be handled without counting them as inventory or without normal warehousing treatment, which naturally reduces the company's overall inventory amount.

Based on sales volume over a certain period, formulate reasonable inventory levels for each product category and divide products into Classes A, B, and C according to turnover speed.

A reasonable inventory level for Class A products is 3. to 7. days of sales, for Class B products 7. to 10 days of sales, and for Class C products 10 to 15 days of sales.

Strategies to Increase the Turnover Frequency of Each SKU

Set monthly work plans for each buyer covering sales targets and gross margin targets.

Separate the products managed by each buyer into those aimed at increasing sales volume and those aimed at improving departmental gross profit.

Each buyer should set monthly sales volume targets for products used to achieve revenue goals and monthly profit targets for products used to achieve gross margin goals.

Products used to boost sales volume should follow a small-profit, quick-turnover strategy. Products used to realize sales gross profit are often second-tier or third-tier brands and are also the products most quickly replaced or eliminated.

Principles for Eliminating Slow-Moving Products

Based on monthly sales reports, buyers should eliminate the bottom 10 or 20 items in each category ranking, or require suppliers to provide solutions for products that do not sell well with the company.

Strategies to Increase Product Sales

Proactively guide surrounding markets into price competition.

Keep markups and gross margin rates within a reasonable range and strictly honor the discount commitments of membership-based shopping malls.

Build an independent, professional, and efficient sales team for group purchasing and government procurement projects for enterprises and institutions.

Implement member points and rebate plans in a practical way.

Launch rich and varied promotional activities.

For products displayed in aisles, such as end-cap displays and N-shelves, the display cycle should in principle not exceed 15 days.

Principles and Methods for Strictly Controlling the Total Number of SKUs

The number of SKUs in malls, departments, and sections should be strictly controlled within the prescribed range during normal selling periods or seasons.

For holidays or special periods, plans for increasing SKU quantities and procurement should be prepared in advance.

Products approaching the season, products out of season, or products nearing expiration that cannot be returned should be cleared or discounted in advance.

If the number of SKUs truly needs adjustment, the increase or decrease should be controlled within 10 percent.

Formulate detailed and comprehensive principles and procedures for markdown handling.

Before introducing new products or developing products with sales potential, there should be corresponding clearance of products within that category.

Principles for Introducing New Products

Prepare a product introduction plan each month for different categories.

New product introduction should align with market trends and sales tendencies.

Introducing new products should not become an additional burden on inventory.

New products should achieve a gross margin level no lower than the average of the existing category.

New products should receive more promotional support and display funding from suppliers.

Newly introduced products should receive market advertising exposure whenever possible.

The total number of newly introduced products should in principle not exceed 10 percent of the total products in that category.

Strategies for Increasing Order Frequency Through Smaller and More Frequent Orders

Meeting the supplier's minimum delivery standard is the prerequisite for placing small orders.

For order discounts that are available only after reaching a certain quantity, the total order quantity can remain unchanged while delivery is split into multiple shipments.

For fast-selling products, the principle can be to reorder whenever inventory is insufficient and arrange delivery whenever an order is placed. This requires full negotiation between buyers and suppliers to reach agreement on such delivery arrangements.

Improving inventory turnover is one of the important measures for home furnishing enterprises to optimize operations and enhance market competitiveness. Inventory turnover not only reflects sales efficiency and inventory management capability, but is also directly related to capital occupation costs, warehousing expenses, and product freshness, especially in the home furnishing industry, which emphasizes design and fashion trends. Therefore, home furnishing enterprises should attach importance to this key indicator and actively take measures to improve it. The Soonfor ERP system centers on enterprise management and uses information technology to automate management, supply chain, production, sales, and other activities, building an integrated management system that connects upstream and downstream business processes.
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