Despite the increased availability of inventory management software, a surprising number of small to mid-sized businesses still don’t accurately track or control their stock. Failing to utilize inventory management can create an avalanche of problems that will, at some stage, come crashing down.
One of the leading contributors to why many small businesses fail is a lack of inventory control, visibility and management. While not always noticeable at first, especially to new businesses, the amount of waste and loss that can occur behind the scenes varies from mild to catastrophic.
Every business needs a control tower
What inventory management offers to businesses of all kinds and sizes, is similar to what a control tower offers to an airport: control, visibility, expertise and accountability. Using inventory management software, every facet of a business’ supply chain can be tracked, managed and optimized. Every node can be connected and valuable inventory and sales data can be collected and updated in real-time, across every location and even from the other side of the world.
Death by a thousand cuts
Something that comes up again and again, when assessing why a business fails, is how capital and productivity have been eroded, often over a long period of time, by small recurring problems. It can be easy to imagine a business going down dramatically in a pit of flames, but more often than not, it’s happened slowly without anyone noticing. It is this invisibility that, most of the time, is perhaps the real reason for failure.
Visibility through inventory management software
While inventory management software performs a lot of practical and seemingly mundane tasks, one of the most important and ‘big picture’ things it provides to a business is visibility. The difference between using it or not is like the difference between someone with poor eyesight using or not using their glasses.
All businesses need to see their inventory, transactions, accounting and processes at high visibility. Without this, mistakes and poor operational processes can go undetected, slowly eroding the foundations of whatever the business tries to build on top.
Cost vs. real cost and the rise of cloud computing
Many small or start-up businesses begin without a dedicated inventory management solution, in an effort to save on costs. Generally, there’s an intention to invest in something later, once the business can afford it. Unfortunately for many businesses that fail, what they really couldn’t afford was to not invest in inventory management software.
The good news for businesses looking to keep their costs low, is that cloud computing has provided a solution via Software-as-a-Service (SaaS). Most inventory management SaaS solutions are available on subscription so businesses can pay a monthly fee rather than have to buy something outright. This also allows for a good deal of freedom; if a business is unhappy with the service they can look elsewhere.
Even by utilizing one of the more basic of the SaaS solutions, a business can begin accurately tracking their stock and sales. How deep a business delves into the wider uses of inventory management is up to them, though the benefits increase as understanding and utilization increases.
Does size matter?
Of course, some small and start-up businesses don’t need the same amount of control as a larger business. A small retailer is certainly not the same as a mid-sized manufacturing business, though many of the tools the manufacturer is using have uses valuable to the retailer also.
With such a wide variety of inventory management solutions now available, businesses of all types and sizes can find one that suits their needs.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. When not writing about inventory management, you can find her eating her way through Auckland.