Small business owners must learn inventory management skills in order to track and systematize their products and supplies. Inventory management is the science of systemizing how items are stored, accessed, labeled and documented. Here are three things every entrepreneur must know about inventory management.
Every small business will need an established inventory system that defines roles, policies and procedures. Although there is no perfect inventory management system, there are many standard techniques and best practices. Every good inventory system will feature easy to read labels, well-organized locations and descriptions that are short and unique. Storage locations need a logical names and categories, so many small business owners user label makers and laminators to reduce wasted time and mistakes. Items with vague descriptions will create confusion and make it hard to maintain accurate inventory counts. Using consistent units of measurement, such as pcs, lbs or bags, will make stock levels and ordering quantities easier to understand. Inventory systems are maintained through monthly and quarterly inventory counts.
Use an Inventory Management Software
Inventory management software programs come in all digital shapes and sizes. Some are packaged with supply chain software programs, while others are included in accounting, logistic and shipping software programs. The ideal inventory management will provide solid functions and scalable flexibility. This is important because the small business of today may expand in the future and need robust software solutions to handle new sales and market channels. Inventory management software will allow business owners to centralize and simplify data, which will make it much easier to analyze and transform into actionable reports. Having real-time data and reports will allow small business owners to stay on top of current customer trends and supply limitations.
Use Product Management Tools
There are many standard product management tools that increase inventory management effectiveness while also boosting sales and return on investment (ROI). These tools help small business owners to streamline the processes of purchasing, shipping, storage and sales to ensure that they continually meet customer demands and preferences. For example, analyzing the inventory can actually be accomplished through Excel spreadsheets by simply categorizing and organizing products in order of the most sales, returns and customer complaints. This can also be used to identify inventory shrinkage areas, which refers to the amount of products needed at any time to meet predicted demand. As a result, business owners can accurately reduce the amount of surplus inventory and reduce storage costs and wasted space.
Most warehouses use a popular inventory method to track and analyze sales. ABC analysis involves dividing and ranking products into categories based on sales. Afterwards, small business owners can prioritize fast moving products and reduce volume for low moving products.