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Inventory Management for Small Businesses

It is vital to assess your business from time to time to make sure that you are on your way to success. One of the most important part of any business is a good inventory management system. It is as important as having an effective tracking software in place for keeping track of employees, for example, tracktime24. There are many ways to implement an inventory management system for your business and one of the best ways of doing this, especially for smaller businesses is by way of an inventory app.

Before beginning your foray into a frenzy while planning your approach to integrating an inventory management system, there are a few questions that you will have to ask yourself. The first question is to know if your small business’s inventory management panned out. You have to know if there is a need to fix the current system or is it already operating at an optimum level. Another question you should ask is if you have had the right products available when you needed them. When you can’t pull anything from your stockroom the moment an order arrives, this usually means terrible management on your part. And finally, you ask yourself if you have lost out on business when items were out of stock or if you did lose money due to excess stock. Improper handling of inventory can include terrible consequences that directly reflect the overall financial health of the company.

This article will discuss some of the basic inventory management techniques, and then we will try to understand what to look for in good inventory management software. We will then go over some best practices for managing inventory by the use of an inventory app.

Inventory Management

First of all, we should define what inventory management is. Inventory management is the aspect of supply chain management whose goal is to always have the right products in the right quantity for sale and at the right time. When inventory management is done efficiently, the company reduces the costs of carrying excess inventory while maximizing sales. The aim is to have good inventory management which will then help you track your inventory in real-time to streamline this process.

When you are effectively managing your inventory, you can then have all the right products in the right quantity on hand. This, in turn, can help you avoid products being out of stock and funds being tied up in excess stock or dead stock. By doing this, you can also make sure that your products are sold in time to avoid spoilage or obsolescence, or spending too much money on stock that could be taking up space in a warehouse or stockroom which in its own can also be considered an expense.

Best practices

You should make a point to have your forecasting working like a charm. Accurate forecasting is important, not just in inventory management, but in almost all aspects of supply chain management and to the business itself. When gathering data for your sales projections, the calculations should be based on factors such as historical sales figures, market trends, predicted growth and the economy, promotions, marketing efforts, and a lot of other factors.

You should use the queue model in which the first items that go in must be the must items that go out this is also called FIFO or First In First Out. In simpler terms, the items should be sold in the same chronological order as they were purchased or created. This scheme is particularly crucial products like food, flowers, and makeup which can all perish at a smaller amount of time. For instance, a bar owner has to be cognizant of the ingredients behind the bar and use FIFO as the method to improve bar inventory and avoid incurring big losses. The same method is also a good idea for nonperishable goods because items sitting around for too long might become damaged, or otherwise out of date and unsellable. The optimal way to use FIFO in a storeroom or warehouse is to add new items from the back of the room so the products that were laying there longer will be placed at the front.

Find out which stock items take a while to get sold. If you have some stocks that have not been sold at all in the last 6 months or so, it might be the best time to stop stocking that item or, at the very least, limit the purchase. Another thing that you might also consider is having different strategies for getting rid of that stock, such as special discount or promotion, since excess stock wastes both your space, capital, as well as time and effort.

You have to make sure to perform an audit of your inventory every once in a while. You should not be complacent even when using a good inventory app. Periodically, you still have to manually count your inventory to ensure that you have in stock matches what you think you have. Some businesses may use other techniques which include an annual, year-end physical inventory that counts every single item and ongoing spot-checking. This can be quite useful for products that are moving fast or have stocking issues.

The cloud is a term that has been thrown around for quite a while now and it has made its way to inventory apps. When looking for any software, the important aspect you want to have for your inventory apps is real-time sales analytics. Make sure that it can connect directly to your point of sale, so your stock levels are automatically adjusted every time you make a sale. Other features that you should insist on is the ability to receive daily stock alert emails so you always know which items are low or out of stock so you can order more in time.

Inventory management in the age of information easier than what it was when having a working computer is not as commonplace as it is now. However, the pace of business transactions has also picked up making it more difficult to stay on top of the inventory.

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