Inventory Management

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Is Your Small Business Taking Inventory Control Seriously?

How does your small business manage its inventory? If your answer is an Excel spreadsheet, pen and paper, or worse ‑ not at all ‑ it’s time to get your inventory under control. In a world where customers expect near-instant gratification, small businesses can’t afford to let inventory problems get in the way of fast and accurate order fulfillment.

Why Inventory Management Matters

Tracking inventory ensures you have products in stock to fulfill customer orders. That’s important for any small business looking to maintain cash flow and build a solid reputation, but it’s not the only reason you need an inventory management system. Good inventory control also avoids spoilage, dead stock, and saves money on warehousing.

4 Inventory Mistakes Small Businesses Make

Unfortunately, many small businesses fall victim to inventory errors that negatively impact sales and customer satisfaction. These are some of the most common ‑ and costly ‑ inventory problems that can hurt your small business.

  1. Overstocking: Some cautious business owners overstock to avoid disappointing customers with out-of-stock items. However, overstocking leads to increased spoilage and deadstock, higher warehousing costs, and makes it more challenging to keep inventory organized and accessible.
  2. Understocking: On the flip side, other businesses chronically understock in an attempt to manage costs. Stocking problems are also caused by poor forecasting and a lack of real-time inventory data. No matter the cause, understocking is sure to let customers down when they can’t buy what they need.
  3. Mispicks: Businesses also face challenges with sending the wrong order to buyers, leading to dissatisfied customers and more returns. Mispicks are usually caused by a disorganized warehouse, improperly trained warehouse staff, and an over-reliance on manual processes.
  4. Shipping delays: Once your product leaves the warehouse, it’s out of your hands. However, customers still hold businesses responsible for shipping delays. That’s why it’s so important to choose the right transportation service whether moving goods locally or shipping to a customer’s door.

The Basics of Small Business Inventory Management

Do these problems sound familiar? If you want to stop wasting money and letting customers down, it’s time to put a proper inventory management system in place. But what does that entail? These are the key components of any good inventory management system.

  • Use inventory management software to track real-time stock counts, set up low stock alerts, and forecast demand using historical sales, market trends, and predicted growth. New cloud-based solutions are far cheaper than inventory software of years past, so there’s no excuse not to upgrade your outdated system.
  • Label and categorize stocks using scannable tags that integrate with inventory management software. RFID tags are considered top-of-the-line for warehouses because they speed up scanning and reduce labor costs. However, many small businesses opt for barcode tags due to lower costs and infrastructure demands. Barcode tags also let warehouse staff use cell phones as scanners, a big plus for businesses trying to minimize costs.
  • Optimize warehouse layout to improve efficiency, organization, and safety. Improved shelving, an updated floor plan, and keeping high-selling items readily accessible are three changes that dramatically improve warehouse operations.
  • Sell products in proper order. Whether it’s first in, first out, just-in-time inventory management, or another inventory management technique, it’s important to have a system for prioritizing stock to keep your inventory fresh.

Inventory is the lifeblood of your business. Without it, you can’t make sales, gain loyal customers, and grow your business. Unfortunately, inventory management all too often is out of sight, out of mind, leading to costly problems for small businesses. Rather than let inventory errors hinder your company’s growth, invest in proper inventory control techniques so you can focus on scaling your business rather than stopping the bleed.

Published by Keegan Riley

Financial Analyst turned Entrepreneur.

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