Whether your small business is well established or a start-up testing the waters, deciding what and how much to order can sometimes feel like a guessing game. Inventory management software can help you keep track of all the moving parts. Here are five tips to take control of your inventory.
Scope the Inventory Function
Different businesses face a range of inventory challenges, and getting on top of those challenges will require an individual approach. As a first step, consider your business’ inventory needs and the features that your inventory management system would ideally have. Small manufacturers may benefit from a manufacturing bill of materials function, while a retailer that sells in-store and online should consider an inventory management system that integrates with eCommerce and retail platforms.
Avoid Paper or Spreadsheet-Based Inventory Control
Inventory cards and spreadsheets are a familiar friend to small businesspeople, who likely use them elsewhere in the business. These apparently straightforward tools make for poor inventory management systems. Spreadsheets are error prone, work poorly with perpetual inventory tracking and make it difficult to keep track of changes over time. The traditional ledger-card approach is even less practical. In contrast, specialized inventory management software can deliver real time, accurate inventory information and will likely prevent costly inventory accounting errors.
Streamlined Inventory Management
Owners of small businesses and start-ups are typically busy people, and often have to deal with unrealistic demands on their time. It pays to invest some time now to implement a streamlined inventory system that will save time and stress later. Inventory management software is useful in this regard as it can automate a range of common inventory tasks, saving time and improving responsiveness.
Often automation is achieved by integrating the inventory management system with infrastructure or processes in other parts of the business. For small businesses, this might boil down to using barcode scanners to speed up a stock take or data entry. Other applications include automatically generating documents such as invoices, purchase orders or shipping manifests. In some businesses, even the reordering of parts and raw materials is automated.
Streamlining inventory management doesn’t just benefit busy owners, it also benefits staff. In a business without a system to manage stock, staff has to manually carry out dull tasks such as checking stock levels and compiling inventory data. An efficient, easy to use system can improve staff morale and engagement, both of which are critical for start-ups trying to get their business off the ground.
Track Inventory Perpetually
Traditionally businesses would keep track of their inventory on a periodic basis, carrying out manual stock counts at the end of a given period and reconciling this with sales and procurement information. This was particularly the case for smaller businesses. Continually tracking inventory is a better approach – by adjusting stock counts as inventory is procured and sold, you always know how much stock you have on hand. Having a real-time stock counter can prevent running out of stock and missing a sale, while being able to control changes to inventory between stock takes means that you can better understand your business’ customers and sales dynamics.
Consider New Approaches
Inventory control technology has improved since the days of a paper and clipboard, so it stands to reason that best practice has also changed. While some tips for inventory management apply to almost every small business, some approaches are more suited to specific situations and industries. For example, waste is a particular challenge in the food industry, and lean production methods have the potential to reduce it and cut costs. This requires a considered inventory management response – ordering less, and paying closer attention to the drivers of demand.
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.