As a business owner, it’s understandable that you want to keep costs low. After all, low costs and low overhead means more at the bottom line for the business, right? Essentially yes, but what if those low-cost measures are costing you more in lost opportunities? Basically, opportunity cost is the alternative cost or value of the next-highest-valued alternative. The notion of opportunity cost can occur frequently in business and time is often what people give up.
Opportunity cost in inventory management
When it comes to opportunity cost in the context of inventory management, we often think about time. In smaller businesses owners and employees will spread themselves across a ream of tasks to ensure that the jobs get done in the warehouse.
For instance, when it’s time for an end-of-year stocktake, a business owner might bring all staff on board to get this done. However, if you take away some of your strategic thinking employees and have them do a stocktake for three days, is this the best use of their time? To a business owner, having staff on hand means that they don’t have to purchase extra inventory management tools to keep track of their stock. So while it may seem like the business owner is saving money, the employee’s time spent doing a stocktake comes at an opportunity cost.
In this instance, it might mean that two employees lose valuable time where they could have been managing an issue on the eCommerce site or it could have delayed their forecasting meetings. This opportunity is lost as their time was dedicated elsewhere. It’s important to see how time enters the equation and the opportunity cost of time spent on alternative activities can have an impact on your business.
So, it’s time to start valuing time with better inventory management tactics. Here are a few tips your business can use to save time and enhance your warehouse and inventory operations.
Use real-time inventory tracking
If you’re ready to move away from manual inventory management systems, the cloud is waiting. Cloud-based inventory management software can reshape the way you look after your inventory. Time spent manually counting stock and entering numbers into a spreadsheet are coming to a close. Time spent with version control issues will soon be a thing of the past as well.
Cloud-based inventory management software tracks and manages your stock in real-time. This means you can always see the health of your stock levels and immediately identify when something is running low. If you replenish stock before it runs out, it will save your customer service employees time. They won’t have to manage as many stock out queries or dissatisfied customers. Your customer-facing sales reps will be able to secure more sales as they can see real-time inventory on any device with internet access. This saves your sales reps time on calls going back and forth with warehouse managers about stock levels. This means less time tracking down stock and more time in front of potential customers.
Complete tasks in batches
We know there is a lot to do to properly manage your inventory. That’s why it’s important to do tasks in batches. Set aside certain times of the day to look at emails and set other times to go through the warehouse to assess quality control. Scrolling through emails on your phone while walking down the warehouse aisles does not benefit either task. Give tasks your undivided attention. It will save you from getting distracted, save you time and improve your engagement with that particular task.
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.