How to keep track of inventory in your small business
Tips and tricks to stay on top of inventory
As a small business owner, it’s important to be aware of all aspects of your business. And if you sell goods, one of the most important things to know is your inventory and stock levels. Keeping track of inventory can help your business excel, but not having the right items in stock can cost your business a lot of money. In this article, we’ll look at inventory management and talk about the importance of keeping track of your inventory, including some strategies you can use to stay on top of inventory. To start, let’s discuss inventory management.
What is inventory management?
You’ve probably heard the phrase about being in the right place at the right time. Well, inventory management is quite similar – it’s about having the right products in the right quantities at the right time for consumers to purchase. This can be a delicate balance between not storing excess inventory yet having enough products on hand to meet customer demand. When done correctly, inventory management can help you increase sales because you focus on ensuring that you have the right product mix on your shelves at all times.
Inventory management can also help you maximize profit because you won’t lose out on potential sales. You can avoid carrying excess inventory that just sits and sits, and you can also avoid spoilage if you sell products that are perishable. As you can see, inventory management is a crucial part of a successful business.
Now, you might not know how to track your inventory, but luckily there are inventory management systems that can help you do just that. Often, these inventory software programs integrate with point of sale (POS) systems to automatically update your inventory and streamline the entire process.
Here are a few other benefits of utilizing a good inventory management software:
- Basic inventory management features
- Can help reduce costs, improve cash flow and the business’s bottom line
- Real-time inventory tracking to show accurate inventory levels, even across multiple sales channels
- Reports to help you forecast demand
- Low stock alerts and restock reminders to prevent product shortages
- Prevents excess stock and helps with inventory control through reorders
- Easily accessible from your POS system
- Tracks inventory across multiple locations
Once you find a good inventory tracking software, you’ll want to make sure you’re using the right inventory management techniques to keep your business running smoothly. Let’s take a look at some of the most common techniques small business owners like you can employ.
What are some tips for small business inventory management?
As you’ve seen, keeping track of your inventory can be a daunting task, but inventory management software can help. Following some of these best practices and techniques will also help your business stay organized and on track when it comes to inventory. Here are some of the best techniques to put into practice at your small business:
Organize your inventory
In order to make sure you’re getting the most accurate inventory information, your company needs to make sure it can count all of its inventory. From knowing the amount of inventory you have to how many of each product SKU you’ve got, keeping things organized can pay big dividends. Keeping track of your inventory starts with keeping detailed inventory records and organization, including product names and colors, barcodes, supplier details and more.
Identify low-turn stock
If you have a product that didntsell well in the last 6-12 months, consider no longer selling that particular inventory item at your retail business. You’ll want to be aware if a product is seasonal or if it’s just not popular. Then, you’ll have to figure out how to get rid of the current inventory you have for that item. One common way to do this is through steep discounts or buy one get one free promotions. After all, stock that doesn’t sell while just sitting at your warehouse is costing you money.
Use the first in, first out method (FIFO)
The first in, first out method is a way to ensure that the oldest products in your stock are the most recent ones to be sold. In this way, you’re making sure to sell the products first that have been sitting in inventory for the longest period of time. This helps minimize instances of perishable goods by keeping a close eye on its lifecycle. In fact, some businesses choose to model their store rooms or warehouses after FIFO. Essentially, the newest goods go toward the back while the oldest goods come to the front.
Track your stock levels
Tracking stock levels is vital for your business. This is a task that inventory management software can help with. It’s also important to make sure that you’re prioritizing the most expensive stock items, as these usually have a higher demand and relatively higher cost to the business. Again, some management software can help you automate these tasks, using data from your connected POS system.
Audit your inventory
While good inventory management tools can save you a lot of time and headache, it’s still a good idea to physically count your inventory from time to time. Althoughit can be time-consuming, this can help you resolve any discrepancies between what you think you have and what you actually have. While auditing methods for inventory may vary, many businesses have a cadence they stick to. Some prefer annual physical inventory checks, while others perform these audits monthly. During a physical inventory check, each item is counted and then recounted to ensure accuracy. Spot checking can also help ensure everything adds up correctly. To audit your inventory more frequently, you can perform cycle counts, which focus on only specific items to ensure those have accurate inventory counts.
Use a good inventory management software
As technology advances, so too does inventory management software. It’s now an essential tool for your business and can really help to streamline your inventory management processes. Not only does a good software allow you to digitize your inventory, but your company can track it, forecast demand and even analyze inventory from any device – smartphone, tablet or computer. That gives you access to all of your inventory right at your fingertips. With the advent of cloud-based software, your inventory is always connected to your POS, allowing you to see real time inventory updates from wherever you are and optimize your product offerings based on this information.
Hire a stock controller
A stock controller has a very straightforward job – control all of the different types of inventory your company has. From raw materials to finished goods, their job is to keep track of all your stock. This stock controller is responsible for all of your inventory, including all purchase orders, deliveries and ensuring product at the warehouse lines up with what was ordered.
Ensure quality control
Making sure that your product is the best it can be is paramount to maintaining a good reputation. Therefore, quality control can help ensure you’re putting out a product that represents your brand in the very best way. So whether you choose to hire people who focus on quality control or just delegate the responsibility to others on your team, it’s important that quality control is at the forefront of your thinking. Not only will you want to ensure the team is looking for faulty products, you’ll also want to ensure everything is labeled correctly.
Consider drop shipping
If you want to worry less about inventory, one strategy is to employ drop shipping. Popular with ecommerce businesses, this strategy lets your company sell products while never holding the product you sell. Instead, when a customer purchases a product from you, it is sent from the wholesaler or manufacturer. Therefore, they’re responsible for inventory, storage and fulfillment.
As you can see, effective inventory management is an important part of running a successful business. As always, the inventory management software that is right for you will be dependent on your business needs. And while there are some strategies you can use to help with your inventory, the biggest way to streamline your business is by working with inventory management software. It lets you focus less on the nitty gritty of managing your inventory, and more on moving your company forward.
Ready to work with a partner who can help you with inventory management?
Heartland is the point of sale, payments and payroll solution of choice for entrepreneurs that need human-centered technology to sell more, keep customers coming back and spend less time in the back office. Nearly 1,000,000 businesses trust us to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us.