Critical Inventory Management Tips for Small Businesses
Small business owners are used to unexpected—and sometimes unpleasant—surprises. When it happens with your inventory, however, it can be especially stressful. While sometimes unusual flukes do happen, inventory errors are more often than not caused by common and avoidable mistakes. Here are a few strategies to help you configure solutions that work for you and your team.
Get organized to avoid losing stock
The most effective way to prevent inventory errors, which also reduces the risk of injury, theft and loss, is to get your warehouse or store room organized. Ensure there is a place for everything, and create diagrams to help everyone stay on the same page.
Along those same lines, consider how you keep track of individual inventory items. There are several ways to accomplish this, from using a basic number or color code to a more robust barcode system that keeps track of inventory with scans.
Barcodes are a particularly adept solution for business owners. It’s a flexible and inexpensive tool that integrates stock from reception to the sales counter, and can even become part of your reordering strategies with proper software behind it. Even beyond the warehouse, it’s a simple way to monitor your in-house investments, logging where equipment is stored and used.
Clean and efficient practices
Keeping your team involved is a critical aspect of inventory management. One idea is to implement a checklist system. Inc. points out checklists are an efficient aspect of systematization that you can introduce to your team in a comfortable manner.
For example, you can post a checklist of cleaning duties for the opening and closing of every shift. When your workers prioritize cleanliness, fewer inventory items get lost or misplaced. You can see your labeling or organization system more clearly and your workers will be able to move stock more quickly. You’ll be more on top of obsolete inventory items with a cleaner warehouse.
Emphasize layout
Be sure to organize your stock by popularity, especially if your industry has a seasonal rotation. Map out the last few years of sales to help create a stockroom or warehouse layout that makes your most sought-after items more accessible. Maximize your inventory’s efficiency, as well as increase picking time, by evaluating your space every 1-3 years.
Human error is prevalent
Many small business owners think that managing their inventory manually is the best way to prevent mishaps, but studies show that the truth is actually the opposite. Plant Wellness Way explains that human error is far more costly and common than computer error. In other words, use the best tech you can afford to manage your warehouse. This can prevent issues with data entry errors.
Set appropriate reorder points
Don’t let your cash get wrapped up in having too much stock. Also keep in mind that if you have too little stock you might miss out on sales. Strike a balance by researching your sales history and customer behaviors each quarter to set realistic reorder points. Keep shipment lag time in mind, and this will help ensure you don’t suffer from a lack of funds or space due to overstock.
Use only one or two storage sites
No matter how good your tech is for inventory management, if you are storing products in various locations, mistakes are more likely to occur. Try to focus on having one warehouse or storeroom that can house all your inventory; two if you have to, but no more than that. This will help avoid confusion that can lead to overstocking and mis-ordering.
Conduct smaller, more frequent inventories
If you want to have better, stronger insight on your inventory (and customer purchasing behaviors) consider scrapping the annual inventory for a quarterly one. If your warehouse is large, conduct regular inventory checks by section, season or category. This will help prevent mistakes like sending the wrong order to a customer.
Regardless of your industry, the inventory management tools you choose will have a direct impact on sales, customer satisfaction and employee productivity. Choose tools and processes carefully. By implementing one or some of these strategies to avoid common mishaps, your business can thrive and grow.