On the face of it, inventory for a business and maintaining inventory should be simple, right? It seems to be a balance of what items a business has inย stock,ย versus how many of them they sell.
However, as any business owner will tell you, whether you run a pet store or a cafรฉ, itโs so much more complicated than that. Inventory and inventory management oversee everything from products in your warehouse orย stockroom,ย to any ingredients or raw materialsย thatย are neededย to make those products, and of course, broken products, out-of-date products, and deliveries.
Inventory management is much more than what you have in stock. Itโs also being able to predict what youโll have inย stock,ย so your business can ensureย that thereโsย enough to meet future demand. This part is crucial at busy times of the year, like Christmas. Of course, thereโs also the issue of having too much or too little stock,ย which can result in your business losing money.
Luckily, there are ways to simplify theย process of inventory managementย for smaller businesses.ย So, read on for a quick and simple guide to better inventory management practicesย whichย will save you and your teamย bothย time and money.
Why Is Inventory Management Important?
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Irrespective of whether a business is setting up a brand-newย business,ย or has been running one for years, theyโll need to track their inventoryย to better manage their costsย and have an ample supply of products to ensureย theyย can meet customer demand. Ergo, they need to have an effective inventory management system.
As stated before, poor inventory management can lead toย financial losses for businesses.ย A business owner may buy too much of a product or item that doesnโt sell,ย orย they mayย buy too little and miss out on income via sales.
When youโre a small business, money is usually tightย so,ย itโs wise and better for businesses to invest in an effective management strategy to make sure they keep costs low. So, with this in mind, what are some of the best tips for managing an inventory?
Use The Right Type For Your Business
There are different ways to manage the inventory for your business. One of the most common options in 2024 for inventory organization is to look into inventory management software, which,ย according to Sortly,ย automates many of the processes required to keep your inventory ticking over asย it needs to.
There are, of course,ย options for smaller businesses for inventory management that donโt involve software, such as manual inventories, where you keep track of your stock with a spreadsheet.ย This method is ideal for smaller shops and online businesses.
If yourย businessย isย larger, you may want to invest in a more complex inventory management softwareย optionย that hasย features like customization, inventory organizationย andย even syncing with offline access.
Aim For Accurate Forecasting
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A core part of managing inventory accurately is forecasting.ย There are many things toย take into accountย withย inventory forecasting, such as historical sales of an item, market trends, the time of year (the Christmas period is a big one!), and even technological advances. Youโll also needย to beย aware of demand shifts and even the state of the economy.
Luckily, in 2024, you donโt have to make these predictions by yourself.ย There areย many business-friendly artificial intelligence or AI programsย that can help youย make the best forecasting predictions for your inventory.ย AI is becoming more affordable for many businesses, so itโs well worth looking into.
Aim To Reduce Low-Turn Stock
It may be the case that there are some pieces of low-turn stock in your stock room or your online inventory. These are simply items of stock that havenโt sold and are no longer in high demand.
Why is it important to identify them?ย There are a few reasons:ย for one,ย it prevents you from ordering the item again, which can cause your business to lose more money.ย It also helps you to identify trends inย customer behavior.ย Lastly, it helps youย toย identifyย which items can be put onย sale to get rid of the low-turn stock at a profit.
Conduct Audits
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Youโll need and want your inventory management system to be accurate.ย Making sure that it is will require you to have the right software in place, as well as staff whoย areย trainedย in theย rightย practices and policies.
Itโs the reality that, despite how accurate inventory systems are, the stock levels will (and should)ย need to be checkedย by a human. So, youโll need to conductย inventory audits, usually once or twice a week, depending on your level of stock rotation.ย Thisย will help youย toย better manage yourย inventory and be confident that youย have all the right items in stock.
It can be worth implementing a system of auditing viaย cycle counting, which can help you to find any potential errors in the data, as well asย spot any waste or low-turn stock that may have gone under the radar.
Use POS When Appropriate
Along with inventory management software, itโs well worthย alsoย having a backup in the form of aย point-of-sale system. These are ideal for businesses like restaurants, which may get through multipleย items of stockย to create a single meal. A POS system will allow you to track your inventory and stock in real time and will also automatically update the levels, as well as the costs.
Many POS systems can be integrated into inventory management systems, which will help you to manage the items of stock that are comingย in,ย and the items that are going out. In some cases, you may be able to purchase these systems together, which will usually be on a subscription option.
This combination of automated options will remove all data entry errors and will allow you to have improved reporting on what you have in stock. Again, this saves time and money andย allowsย you to focus on the moreย importantย parts of managing your business, such as customer service.
