Managing inventory well will look different for every company; lean companies have less inventory, risk averse businesses have more. Every business keeps track of their inventory slightly differently. As your business grows, you’ll need to think critically about how effectively you’re keeping track of this important facet of your business. But how do you know when? Here are some signs that it’s time to rethink how your business manages its stock control.
Sign 1: Human Error is Getting in the Way
Human stockcounters are notoriously unreliable, and that’s before the data has even been entered into the system. A world class typist will make a keying error in every 500 keystrokes, and most staff will err more often than this. Picking up most of these errors often isn’t enough – one unusually large order or one poorly timed stockout can be disastrous for a growing business operating on tight margins. Even putting aside the risk of a catastrophic error, frequent errors mean more time is spent checking and correcting mistakes, instead of adding value in your business.
If you’re finding that human error is limiting your team’s potential, it might be time to rethink your approach to inventory. For high tech businesses, manual stock control and data entry into spreadsheets are a thing of the past. Instead, innovative businesses use smart tech like barcoding, RFID tags and inventory management software to keep accurate inventory records.
Sign 2: You Struggle With Fulfilling Demand
Sure, every business involves solving some difficult problems. But by and large, those hard problems should not extend to deciding how much inventory you’ll need to fulfil routine customer demand. If you find yourself having to dig deep to decide how much stock to order in, it’s probably because your business doesn’t have the right data to forecast future stock requirements.
Inventory management software addresses this problem in two significant ways. First, it ensures you have an accurate historical record. Having a comprehensive record is useful as it allows you to spot seasonal and event-based patterns that affect customer demand as well as supplier pressures. Second, inventory management software enables you to use this data to produce a reasonably reliable forecast of expected demand.
Sign 3: There’s Too Much, or There’s Too Little
As in many fields, finding the Goldilocks zone is important in inventory management; too little stock or too much stock can quickly break a stock-based business. Too little inventory means that your business is unable to meet customer orders and is likely to lose customer trust, while too much inventory is likely to leave your business with a shortage of working capital and rising inventory carrying costs.
By helping you keep an accurate inventory record, inventory management software helps ensure that you avoid over or under ordering. It is especially useful for recurring orders, particularly at a scale where it might not be economic to have someone manually order. Rather than maintaining a standing order each week, month or quarter, inventory management software can alert you when inventory stock reaches its minimum levels so you can reorder raw materials in a timely manner.
So, if you’re seeing any of these signs, consider whether your stock control systems could do with some rejuvenation. Best in class cloud inventory software is intuitive to use, easy to implement and has no upfront capital cost. More importantly, the right software can help you get your inventory management back on track.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.