Business inventory management is a crucial part of controlling your expenses as a business owner. Unfortunately, it can get more complicated as you move along.
That means tracking not only your product inventory but also your raw materials and components. In some cases, you might even need to manage your company’s office supplies.
The goal of inventory management is to ensure that you have the right products, in the right quantities, at the right time. In this article, we look at the best ways to do so.
1. Create A Product Information Database
Business inventory begins with the products you need on hand. This requires you to keep up with lots of data about each item. For instance, you’ll need to track the following:
- Product names and numbers
- Purchase price and date
- Quantity on hand and reorder levels
Each of these pieces of data will help you know how much you’re using any given item. It will also help you seek more competitive pricing the longer you’re in business.
2. Make Note Of What You Have
Another important aspect of inventory management is to get it all down on paper (or more likely, on a hard drive or cloud server). Spreadsheets are effective at this, but as your inventory grows, you may wish to consider a more sophisticated system.
Find something that integrates with your existing technology to save on costs. Even if it seems like a large up-front expense, the backend savings potential is well worth it.
3. Prioritize Your Most Profitable Inventory Items
One of the great things about inventory management software is that it can help you determine your most profitable inventory. For example, you can run a report that shows you the following:
- Inventory items that sell the most
- Inventory items with the highest markup
- Inventory items that are selling slowly
This information helps to focus on what’s working and either reduce or eliminate what isn’t. It also illuminates slow-moving inventory and readjusts or reconsiders whether it’s worthwhile to continue ordering.
4. Get Everyone On Board
If inventory management for your small business is to be effective, you need buy-in from everyone. That includes shipping and receiving clerks, front-office employees, and even the workers on the dock.
The more uniformity you bring to your processes, the easier it is to keep track of what you have on hand. This helps avoid errors, overages, and shortages.
5. Do Your Own Reorders
To help, consider doing your own reorders. Vendors or inventory managers might offer the service for you, but inventory management for your small business is only as good as the data that goes into it.
They’re not working with you each day. They likely have more clients and won’t do the deep dive that your business needs. Doing it yourself helps you to maintain a high level of accuracy and consistency.
6. Invest In Tech
Technology plays a crucial role in all of this. Consider a free invoice maker to get started or small business inventory management software to go with your ERP. But make sure it plays nice and takes out as many “workarounds” as possible.
Business Inventory Management Is Vital To Your Success
A good deal of success relies upon how well you control your expenses and how effective you are at sales. Effective business inventory management will tell the story of both of these numbers and help you get the most bang for your buck.
So make sure you’re investing right, encouraging teamwork, and acquiring as much effective data as you can. Best of luck! For more business tips and information, check out some of our additional posts.