It's critical to assess your company frequently to verify that you're on the right route. One of the most crucial parts of any business is inventory management. How has inventory management worked out for your small business? Have you ever had the proper things when you needed them? Have you ever lost a sale due to an item being out of stock? Or did you lose money because you had too much inventory?
We go over some best practices to manage inventory in this post, as well as fundamental inventory management techniques and what to look for ineffective inventory management software.
What is Inventory Management?
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Inventory management is a component of supply chain management that seeks to ensure that the appropriate products are available for sale at the appropriate time and in the appropriate amount. Businesses can lower the costs of carrying extra inventory while increasing sales if done correctly. Inventory management software can help you understand how to track inventory in real-time, making the process more efficient.
If you manage inventory correctly, you can guarantee that you have the right products in the right quantities on hand, avoiding product outages and wasting money on excess inventory.
You may also ensure that your products are sold on time to minimize spoiling or obsolescence, as well as wasting money on inventory that is taking up space in a warehouse or stockroom.
Different Types of Inventory
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Before you tackle that you manage inventory effectively, you must first grasp what inventory entails. These are only a few of the many forms of inventory:
• Raw materials, which are the materials you employ to make your products
• Unfinished products and works-in-progress that are not yet ready for sale
• Finished goods, which are usually kept in a warehouse until they are sold or exported
• Goods in transit, which have left the warehouse and are on their way to their eventual destination
• Cycle inventory, which refers to things that are delivered to a business from a supplier or manufacturer and then sold to clients right away
• Anticipation inventory, or surplus merchandise in preparation for a sales uptick
• Decoupling inventory, which refers to components, supplies, or products that have been held aside in expectation of manufacturing slow down or halt
• MRO items, which assist the manufacturing process and stand for "maintenance, repair, and operating supplies."
• Buffer inventory, also known as "safety stock," acts as a safety net in the event of an unanticipated problem or the need for additional inventory
• Sorting your inventory allows you to see which goods belong in the same category and manage them accordingly. For instance, you'll manage finished goods differently from raw resources.
Inventory Management Process
To manage inventory is the process of tracking and regulating stock as it moves from suppliers through warehouses and finally to customers. The five primary stages to be followed are as follows:
1. Purchasing: This can include purchasing raw materials to transform into products or purchasing ready-to-sell products that don't require any assembly.
2. Manufacturing: Putting your finished product together from its component pieces. Manufacturing is not for every company; wholesalers, for example, may choose to skip this process entirely.
3. Keeping stock: Keeping raw materials on hand before they're manufactured (if necessary) and finished goods on hand before they're sold.
4. Sales: Getting your inventory into the hands of customers and collecting payment.
5. Reporting: Companies must know how much they are selling and how much money they are making on each sale.
Benefits of Inventory Management Software
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- Lower costs, increase cash flow, and improve your company's bottom line
- Keep real-time inventory records
- Assist with demand forecasting
- Prevent product and production shortages
- Avoid having too much inventory and raw resources
- Allow for simple inventory management on any device
- Be accessible immediately from your retail point-of-sale
- Organize your warehouse and save time for your employees
- Provide quick and easy bar code scanning to expedite the intake
- Enable multilocation inventory tracking across multiple sites or warehouses.
Best Practices to Manage Inventory for Small Businesses
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Here are some approaches used for small business inventory management:
1. Improve Your Predicting Skills
Forecasting accuracy is critical. Your estimated sales statistics should be based on elements such as historical sales figures (if you sell with Square, this information can be seen in your online Dashboard), market trends, predicted growth and the economy, promotions, marketing activities, and so on.
2. Take a First-in, First-out (FIFO) Method
Goods should be sold in the same order in which they were purchased or generated. This is especially true for perishable items such as food, flowers, and makeup. It's also a good idea for nonperishable goods, because anything that lies around for too long may get damaged, out of date, and unsellable. In storage or warehouse, the best approach to employ FIFO is to add new goods from the back so that older products are at the front.
3. Identify Which Stocks Have a Low Turnover Rate
If you haven't sold any stock in the recent six to twelve months, it's probably time to get rid of it. You might also think about other ways to get rid of that stock, such as a special price or promotion because excess inventory wastes both space and money.
4. Conduct a Stock Audit
Even if you use any sophisticated software to manage inventory, you should count your inventory regularly to confirm that what you have in stock corresponds to what you believe you have. Businesses employ a variety of methods, including a year-end physical inventory that counts every single item and regular spot-checking, which is particularly beneficial for products that move quickly or have stocking concerns.
5. Use Cloud-based Inventory Management Software
Look for software that can track sales in real-time. Square's software connects directly to your point of sale, allowing you to automatically change your stock levels whenever you make a transaction. Receive daily stock alert emails so you always know whether things are low or out of stock so you can order replacements promptly.
6. Always Keep an Eye On Your Inventory Levels
Make sure you have a robust system in place for tracking your inventory levels, with the most expensive things coming first. Effective software saves you valuable time and money by doing most of your work.
7. Reduce the Time It Takes to Repair Equipment
Because crucial machinery isn't always in working order, keeping track of those assets is critical. A faulty piece of equipment might be pricey. Monitoring your machinery and its parts is essential for understanding its life cycle and being prepared for problems before they occur.
8. Don't Forget About Quality Assurance
Whatever your area of expertise, it is vital that all of your products look great and work efficiently. It might be as simple as having personnel conduct a cursory inspection during stock audits, complete with a checklist for symptoms of damage and proper product labeling.
9. Enlist the Help of a Stock Controller
To manage inventory you have on hand at any given time is referred to as stock control, and it comprises everything from raw materials to finished goods. If you have a large amount of inventory, you may require one person to be in charge of it. A stock controller is responsible for processing all purchase orders, receiving deliveries, and ensuring that everything arriving fits the order.
10. Recall Your ABCs
Many businesses discover that dividing inventory products into A, B, and C categories allows them to maintain tighter control over higher-value commodities.
11. Think About Drop Shipment
If your organization uses drop shipping methods, you can sell items without really retaining inventory. When a customer buys from your store, a wholesaler or manufacturer is responsible to manage inventory and transporting the products. You won't have to bother about inventory holding, storage, or fulfillment this way. Many online store owners use drop shipping methods, however, this supply chain fulfillment strategy may be used by a wide range of companies in many industries.
Inventory Management with Strikingly
Strikingly is focused on arming our users with the knowledge and skills they need to succeed online. We understand how vital it is to come up with the most effective inventory management solutions, whether you are a retail shop owner, a small business owner, or a corporate business manager. It's such a delight to find a website builder that includes everything you need for business operations and inventory management.
If you're having trouble keeping track of your inventory files, Strikingly has a solution for you. You can run your retail business online or offline, just like we said, but excellent techniques to manage inventory can put your company ahead of the competition. Strikingly makes it simple to add a simple store to your company's website.
Conclusion
Because inventory is your company's most valuable asset, you must safeguard it and nurture it in the right direction to save and create money. You'll never get ahead if you don't use inventory management tactics.
Become a member of an inventory management software that understands the fundamentals of how to manage inventory. The fundamentals are essential for a long-term business. Instead of being a hindrance, software should be a driver for your progress.
