Managing inventory is a tedious task with real business consequences. Bad inventory management can lead to a complete loss of business, as it directly affects the cash flow cycle. If you are gearing up to start a small business or already own a small business, one thing you need to take extra care of is inventory management.
The management of inventories is one of the most integral parts for the entire process as it helps you to assess how well your business is doing and whether or not your business is on track to succeed.
You might be thinking on how do you plan to go about small business inventory management? It may sound simple, but a lot can go wrong and get complicated if you don’t have a firm grasp and proper management of what you are doing.
Good news! Inventory management doesn’t have to be complicated; it just has to be organized.
In this article, you will be learning four basic inventory techniques for managing your inventory. Effective inventory management can help you in having the right products in the right quantity at the right time. You can avoid products being out of stock and funds being tied up in excess inventory.
1. Invest in good inventory management software:
Goodinventory management software can act as your one stop to keep track of your inventory in real time, reduce costs, improve cash flow, forecast demand, prevent production shortages, analyze inventory from various devices, be accessible from your retail point of sale, prevent excess stock and raw materials, optimize warehouse organization and precious employee time, multi-location management, offer quick and painless bar code scanning, and so on.
There are various software options like finale inventory, Zoho inventory, and vend that can help your small business manage inventory. These softwares are easy to understand, affordable to boot and super adaptable.
By using a good inventory management software for your small business, you can automate your operations and focus on investing your valuable time in innovative ideas and strategies for your business.
2. FIFO Approach:
First In First Out (FIFO) approach is a stock evaluation and management approach. When it comes to small business inventory that means products should be sold in the same chronological order in which they were produced or purchased. So what product comes in first, must go out first.
This approach is useful for all businesses and especially those businesses that deal with perishable organic or organic based items. Model your stockroom or warehouse in such a way that old products are in front and new items are added behind.
3. Audit your stock
You don’t just rely on your inventory management software to ensure everything is up to date and on point. Even the best software in business you can’t be entirely dependent on. You should be counting inventory by yourself to make sure that all the numbers add up and match. Computers can also cause errors just like humans, so why not double check?
There are various ways to audit your stock-either you review your stock annually or conduct a year-end physical inventory in which stock is counted. In this way, the inflow and outflow of your stock are cross-checked. Based on your business you can make a choice but ensure that everything adds up correctly.
If you have a business that creates multiple products or a product with different parts, hiring a stock controller may be helpful. Your stock controller will be responsible for ensuring that products that are coming into the warehouse match up with what was ordered. And also show you the amount of inventory your small business holds at any given time.
4. Remember Quality Assurance:
No matter what you sell, the quality of the product should never be compromised. You should make sure that your product looks good, and works right. According to your business, you can either have a person in charge of quality control or you can have a team who does quick checks during stock audits, who can check for damages and other issues.
When the quality of your product is at the highest, it shows your customers that you care about them and what your business has to offer. Keeping track of the quality of your product helps you with inventory management as you can ensure that your shelves are always stocked with the best products only.
The Bottom Line:
Whether you are looking to switch from spreadsheets to modern POS (Point of Sale) system or organizing an existing system that has become disorganized or starting a system from very scratch, these principles will help you streamline and set up your operation.
With the right inventory management system in place for your small business, you can focus on things that are more important like business expansion or implementing innovative strategies for your business. Let the software do all the time consuming operational tasks.