Best Inventory Management Practices to Improve Small Businesses

Inventory Management

If you’re running a small business, it’s normal to think that you don’t have the money, time, and resources to manage your inventory well. But the truth is that with some well-laid-out plan and process, you can exercise and implement sound inventory management that will bring success to your small business.

Investing, for example, in cloud invoicing software can help streamline processes and allow authorized employees to access invoices, receipts, tax payments, and many others. This will allow for faster processing of business and accounting transactions. As a business owner, you can also see in real time each business transaction.

Lay Out a Clear Process

Things can get out of order pretty quickly when there are no clear processes to follow. Your employees must be guided by a map of what should happen within an organization. The flow of the business transaction must be clear to all workers so that when incidents happen such as loss of stock or excessive inventory, solutions can be easily and quickly put in place. A good inventory management system must plan out the sales and purchasing process—from quoting clients, issuing invoices, preparing order receipts, to purchasing inventory.

Label Items Effectively

Small businesses with a small inventory are easier to manage. This means that you can use an Excel spreadsheet to manage the coming and going of the products. However, for larger inventory, this means having to make use of bar codes and serial numbers. Excel doesn’t have the means to keep track of these items. Instead, you can use management software that will allow you to monitor the number of items available, where they are (whether in-store or in the warehouse), and the number of sales per product.

Use the FIFO (First In, First Out) System

This approach is created especially for perishable products such as food, flowers, and makeup. The products are sold according to the order they were purchased or manufactured. This ensures that all products—whether perishable or non-perishable—won’t sit on the shelves for too long because that also affects their quality in the long run. In a storage room, the best way to implement this approach is to add new deliverables at the back so that the old ones will be sold first since they’re at the front of the room.

Identify Low-sales Stock

women in inventory

If you have items that have been sitting in your warehouse for six to 12 months before they get dispersed, it’s time to stop its production. It’s a loss of space and capital to stock on products that are not selling well. Even if you manage to sell them eventually, you’ll have already lost a lot of time and money storing them. Consider selling these items for a discount so that you can free up some warehouse space.

Track Your Stock Level in Real Time

This is why it’s important to have cloud-based inventory software. The software will show real-time data on which items are low in stock and which are selling fast. This will allow you to track the sales history and the movement of products in your small business. With inventory software, your stock levels will be adjusted automatically after each sale is made.

Taking control of your inventory will help you reduce cost, manage expectations for growth, monitory the movement of products, and analyze sales patterns. All of these will help you prepare the business for the unexpected. It will also equip the business with tools necessary to survive the industry.