By Brian McKay
Of all the different things that go into running a business, it’s probably safe to assume that you don’t find inventory management all that exciting. However, if you don’t keep close tabs on the things you’re actually selling, your firm can rush headlong into some pretty serious problems. Like many small business owners, you might be finding inventory management a little too much to handle. Here, we’ll go over some great ways to simplify it.
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First of all, make sure you’re not biting off more than you can chew. Some business owners are afraid of not being able to keep up with demands, and will spend far too much on their inventory. While I see the logic, this can put you in danger of grinding down both your available capital and your profits. Obviously, good warehousing isn’t free, and if you keep stock just sitting on the shelves it’s subject to depreciation, damage and (in the worst case scenario) obsolescence. When inventory has had its day, it can be very hard to shift. The best way to get around this issue is making sure you have some accurate projections on the stock you need, and when you’ll need to move it. The best way to figure this out is by looking at your sales figures in the past. Go back through the past 12 months of sales, and pin down an average.
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Another thing that can really complicate your inventory is the lack of accurate tracking. Once you’ve done the necessary projections and figured out how much stock you’ll need, the next important step is making sure you actually have it available. Think about your supply chain for a moment, and you’ll realise that there are all kinds of opportunities for miscounts. During receiving, fulfilment, and of course the thefts that are all too common. If you’re in the manufacturing sector, you’ve also got to plan for scrap or yield in the production process. Fortunately, a great solution is now pretty accessible. Electronic data interchange, combined with simple tools like a Motorola barcode scanner, will make data entry issues a thing of the past. You should also consider implementing a cycle-counting system to make things even more efficient and foolproof. A code scanner will make life much simpler and keep inventory better organized.
Finally, consider scrapping standard spreadsheets as part of your inventory management. It might seem natural to stick to basic spreadsheet software like Microsoft Excel or Lotus 123 to keep tabs on your business’s inventory. However, if you don’t innovate at all, you could be running a pretty significant risk. Unfortunately, it’s very easy for regular spreadsheets to be deleted by accident or for you to lose important changes. There’s also no airtight way for several people working on inventory to sync up their spreadsheets. Your capital might be pretty tight, but I highly recommend upgrading to more reliable software. Go looking for some programs such as Freshservice, and find one that will fit smoothly into your business model. This software is packed with features to make inventory management so much easier.
Brian McKay is a co-founder of zenruption. He has a B.A. in Political Science from Gonzaga University and an M.B.A. from Boise State University (yes that blue field). His goal in life is to look out for the regular guy and bring as much knowledge and change to this world as he can. His purpose in founding Zenruption was to do just that and help craft the world he wants his daughter to inherit. Please feel free to email him any feedback or article ideas at [email protected]. On twitter: @brianmckay71
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