Five Tips for Managing Your Inventory

As a small business owner, it’s important to manage your inventory. Why? Not managing your inventory accurately can lead to mistakes, slower order fulfillment, and improper stock control, which can all cause financial loss for your business.

What does inventory management entail? Inventory management is the process of ordering, storing, and selling inventory for a business. The goal is to understand your business and customers so well that you can predict when to have the right products in the right quantity for sale, at the right time. Knowing and managing your inventory will also help you prevent spending money on stock that’s not selling and overstocking.

Implementing these five strategies into your business plan will help you better manage your inventory and business. The benefits include increased productivity, improved use of space, and efficient use of stock.

Invest in Inventory Management Software

An electronic inventory management system is one of the top ways to get a grasp of your inventory. If it’s linked to your point-of-sale (POS) software system, then you can use the system to make sure the inventory count is correct and that you have enough stock. There are different software programs available, so it’s best to research which one is best for your business and goals.

A good inventory management software program should:

• Reduce costs and improve income flow

• Track your inventory in real time

• Help you forecast demand

• Allow for easy inventory analysis on any device

• Be accessible right from your point-of-sale (POS) system

• Optimize warehouse organization

• Offer quick and painless bar code scanning to speed up intake

Know Your Inventory

Being an expert at inventory management is knowing what you have. You should be able to answer these questions:

• How much of X do you have in stock?

• How much of X has been sold in the last Y months?

• How much of X do I need to order?

• What’s my best selling item?

If you can’t answer these, then you need to do a deep dive on your inventory. Get to know the products you sell, how much stock you have, what sells the best, and what doesn’t sell as well as other products.

Knowing what products sell better than others is important, so that you can keep that product in stock and keep up with customer demand. It’s equally important to know which products aren’t selling, so that you can stop stocking them as often, as they aren’t making your business any money. Consider selling strategies, like promotions, to get rid of overflow stock.

Knowing how your products sell and when consumers are buying certain products can help you forecast. Your forecasting should be based on historical sales figures, market trends, predicted growth, and the economy. Being able to forecast sales trends will allow you to manage your stock better.

Audit Your Inventory

Inventory management software is a great tool to use, but, like with all technology, there is a chance of error. The best way to know how much product you have is to conduct manual stock counts every so often. You’re highly likely to come across obsolete, stolen, or damaged stock. Conducting manual audits of your inventory will give you an accurate picture of how much inventory you have.

Organize Your Stockroom

Managing your inventory is easier when it’s organized in a way that makes sense to you. Use containers or labels to create an organized system. This will help you keep track of what products you have and makes it easier for you to find products in the stockroom.