As your small business develops, inventory management gets harder to maintain. Your team will likely be juggling stock through multiple channels, as well as managing raw materials. Even for the smallest companies, this can easily get out of hand.
Whilst it's tempting to view inventory management as an issue for only the largest businesses, smaller stockists and wholesalers need to stay on the ball as well. So, how should your business manage its inventory? In this detailed guide, you'll find everything you need for inventory management success.
Why inventory management is essential for small businesses
First and foremost, what is inventory management? Put simply, it refers to the processes and tools a company uses to keep track of its stock. That includes purchasing, storing and selling stock, along with forecasting future sales trends. Whilst many recognise the benefits of inventory management systems for the largest corporations, the advantages it offers small businesses are often under-estimated.
Many smaller companies assume they can manage their inventory manually - using either Excel spreadsheets or pen and paper to track their inventory. However, in reality, this approach creates many challenges for small businesses. Here are just a few reasons why robust inventory management is important for smaller organisations.
Boosting stock visibility
If stock is languishing on your shelves, it's not just tying up capital but taking up space that could be occupied by more popular products. Similarly, if stock is too low, you could be at risk of stock-outs. Improving the visibility of stock levels and usage rates, ensures you can maximise profits and improve availability.
Improving integration across channels
Even if your business is small, it's possible that you sell on more one platform. You might sell from a website or eBay store and take sales over the phone too. Maybe you also have, or are considering, a trade counter. These channels soon add up, and they can become difficult to track. Inventory management software ensures that if your trade counter has a stock-out, your other platforms are updated - along with your purchasing team.
Scaling your small business
As your business grows, the demands on manual stock taking increases, with more orders and potentially more stock, you'll need additional staff for processing and administration, which can be expensive. A stock control system like Profit4 will automate the manual tasks involved in inventory management and enable you to scale without the need for additional staff, while also ensuring orders are dispatched quickly and efficiently.
3 serious inventory management mistakes to avoid
So, what should you avoid when it comes to inventory management? There are many errors that small businesses could potentially make in this area. Staying aware of what to avoid can help you to pinpoint what works best.
Ignoring relevant sales data
Inventory management shouldn't be a guessing game. Restocking every product based on gut instinct won't make the best use of your inventory. Some products will sell better than others and you need to be aware of your best-sellers and non-movers. That's where detailed reporting and analytics comes in.
Your approach to inventory management should always be data-led. With inventory management software like Profit4, you can see what's selling and what's not, along with clear demand forecasting. This helps you to make informed decisions about which products to restock and which to sell off quickly.
Relying on manual stock control
Spreadsheets can only take your business so far. They need to be updated manually whenever an item is sold or returned. That takes up valuable time for your staff. The more stock in your inventory, the harder that spreadsheet will be to track. Then you're more likely to be working with inaccurate data. That can lead to stock-outs and negative customer experiences.
As your business scales up, you need a solution that scales with it. Inventory management software automates your stock control, reducing human error and updating in real-time. That keeps you in control and gives you more time to focus on your business.
Keeping your inventory in the dark
When it comes to inventory management, visibility is everything. If you don't know where a product is located, or even if it's in stock, you run the risk of overselling. Alternatively, you may undersell, with deadstock stuck to the shelves for years on end. Ultimately, that all adds onto your storage costs.
Keeping track of your stock can be difficult, even for smaller businesses. Fortunately, inventory management software keeps your stock visible across multiple warehouses and sales channels in real time.
