The pandemic forced every business to adjust inventory methods because of supply chain issues. Last year, 69% of companies said that inventory control was a priority.
As the pandemic heads into its third year, inventory management is more important than ever. Shipping issues, staffing shortages, and raw materials continue to disrupt the ability to do business normally.
As a small business, learning how to do inventory is a necessary step to survive. Customer expectations are higher than ever, despite the challenges.
There are more businesse appearing, giving customers more choices, and putting pressure on your business to come through with each order.
If your business continuously runs out of inventory, customers won’t trust your business to fill their needs. On the flip side, you could lose money on ordering too much stock.
Running a business isn’t easy, but this article can help you. Keep reading to discover the top inventory tips and how you can manage inventory for small businesse.
Understanding Inventory Management
Knowing what inventory management is helps you focus your efforts on the task at hand. People tend to think that inventory management and supply chain management are the same things.
There are a few differences to understand. They tie together, but they should be treated as separate activities.
What is inventory management? Inventory management is the process of ordering stock, storing stock at a warehouse, selling and tracking stock.
Inventory management occurs at a location level. It helps organizations know when to order more stock for popular items, see sales trends, and run promotions to move older stock.
Inventory management is important for consumer goods products. These products have sell-by dates and if there’s too much inventory, retailers lose money.
Supply chain management focuses on the entire process from production to customer delivery. Supply chain management takes into account raw materials, production issues, and logistics.
Inventory management is part of supply chain management. A warehouse receives goods from manufacturers and delivers them to the point of sale.
How to Do Inventory
If you’ve never done inventory before, you need to do a complete physical inventory. You and your staff will count the amount of stock in your warehouse or store.
Inventory for small businesse usually means manually counting inventory and tracking on spreadsheets. It doesn’t cost much to do this type of inventory, but it leaves a lot of room for errors.
Using software for inventory management improves the speed and accuracy of inventory. It also makes it easier to do random checks of inventory in-between full inventory.
The advantage of doing a full physical inventory is that you can see discrepancies between what you think you have in stock and what you actually have in stock.
If there are discrepancies, it could mean that inventory breaks or gets stolen. These are major issues that cost your business money.
It makes running a small business easier because you can get an accurate picture of your budget and earnings.
The advantage of using a software suite for inventory management is that you can track important data for every item in your company.
You’ll enter important information in the software, such as the SKU, UPC, quantity in stock, price, tax rate, wholesale cost, and when to reorder.
Create an Inventory Plan
An inventory plan starts with the inventory system you’ll use. The perpetual inventory system tracks inventory on a continuous basis. Updates get made when products are sold and received at the warehouse or location.
A periodic count is a physical count of inventory. This is done on a quarterly or monthly basis and transactions get recorded when inventory is complete.
A good system to have is a hybrid system, where you complete a full inventory annually. In the meantime, you rely on a perpetual inventory system and spot-check sections to ensure accuracy.
A full physical inventory takes careful planning. You need to decide who will help with inventory and train them. Let vendors know that you plan to conduct inventory.
Check software, scanners, and pick up any items you need to conduct inventory. You need to make sure customers are aware of the count in case it disrupts your operations.
You’ll need to choose a cut-off date and time for entering data into your system to ensure an accurate count.
Create a Receiving System
After you do your physical inventory count, you’ll need to develop a system to receive goods. This is the first step to ensure your inventory counts are always accurate.
When a shipment comes in the person receiving the order gets a copy of the purchase order and reviews the entire shipment. They ensure all boxes arrive and compare the order received with the purchase order.
If there are discrepancies, contact the vendor and get the order straightened out. If there are no outstanding issues, then enter the shipment in the inventory management software.
Rely on Data Analytics to Make Decisions
Running a small business requires so much more than making decisions based on your gut. Data-based decisions are at the core of the most efficient businesse.
What can you do with data after you take business inventory? You’ll know what your most popular items are so you’ll always keep them in stock.
Inventory management also tells you what your profit margins are. If they’re too low, then you can raise prices or work with vendors to lower your costs.
Doing Inventory for Small Businesses
Running a business is hard work. You have more competition, customer demands, and supply chain issues. The best way to manage your business is to make use of these inventory tips.
You just learned how to do inventory in a way that works for your small business. Make sure you invest in software and tools to help you track inventory accurately.
You’ll be able to make better business decisions. Do you want more business news and tips? Head over to the home page of this site Learn More