Using an accounting system with an inventory control setting
An accounting system, no matter how great it is for accounting, will never have the analytical features to manage inventory precisely. A lot of people focus on numbers and profits. However, although important, when it comes to expanding your business without a proper paper trail and information you can become overwhelmed with all your messy inventory levels.
Using sales data for inventory management
You cannot draw inventory data from sales, which generally only shows you the products that are sold. Too many people rely on sales data to inform their inventory management and this can be wearisome as stock levels drive the sales process and not the other way around. Sales will bring in profits but that is only because of proper stock management. Inventory management is supported by on-demand information which is entirely different from any data that can be drawn or interpreted from sales data alone.
Using historical sales data to forecast future stock planning
A major contribution to poor inventory forecasts is by only taking historical sales data into account. There are many other factors that affect inventory planning and that need to be considered, for example, shelf life of stock, current inventory on hand, and even the moving average cost of stock. Using the wrong type of data can lead to inaccuracies in safety stock levels and calculations, and your business may miss sales due to not ordering enough inventory or experience wastage due to over ordering and stock becoming obsolete.
Using Excel for inventory management
It is bad business practice to start using spreadsheets for inventory management. It inhibits the potential growth of your business and certainly does not factor in a healthy, growing business. Not only is the use of spreadsheets labour intensive, it is prone to human errors, which then reflects an inaccurate level of inventory.
Using outdated business systems
Cloud computing is where the next generation businesses are heading. Historically, businesses would run applications or programs from software downloaded on a physical computer or server in their building. Cloud computing allows people to access all kinds of information anywhere, anytime just by using the internet. There are many reasons why cloud computing is beneficial in sound inventory management.
Breaking these inventory management bad habits is a must to remain competitive in today’s business environment. Good inventory management will effectively mean you will be able to close every sale because you will have stock available. Furthermore, it ensures you can manage customer expectations because you will know exactly what you have in stock and what you have not got in stock, increasing positive customer perceptions of your brand. Inventory management that is effective will give consumers confidence in your products. These bad habits need to be broken now if you wish to grow a healthy business in the future.