Inventory management is a vital and integral part of any small business. However, it can be difficult given the costs you can incur and the choices available.
Many things can go wrong if you don’t do inventory management properly. So how do you manage inventory for your small business? Here are tips to help you with inventory management.
1. Focus on Quality Control
It is crucial to focus on quality control. Make sure you do a quality inspection to give your customers good products. You can have a person in charge of quality control or a team who does stock audits once in a while. If you have the highest quality product, your customers will know how much you care about your products.
2. Get an Inventory Management Software
One of the best ways to improve your small business inventory is using the software. An inventory management software will help you keep your inventory digital and make it easy to track, analyze, and forecast demand. Research the different software types to get the appropriate one for your business. With the right software, you can track your stock levels in real time.
3. Keep Track of the Stock Levels
You’ll need a strong system to track your stock levels. Doing so can determine what you should ship first, what to stop ordering, and even the new arrivals. Inventory management software is excellent for tracking your stock levels. The software automatically updates the stock quantity you have on hand. You can then measure your SKU productivity and find ways to optimize your storage space.
4. Use Drop Shipping
With drop shipping, you can run your business from anywhere as long as you have internet connectivity. The products are sent from the manufacturer directly to the consumer. On the other hand, the traditional business requires you to have stock in a warehouse. You don’t need to rent a space to store your products with drop shipping. Therefore, you’ll reduce the overhead costs. You’ll only be responsible for the marketing and selling of the product. Make sure you have a good relationship with your drop shipping partner to help you monitor the transactions.
5. Identify Low-turn Stock
Low-turn stock refers to the stock you have not sold within a year. If you have low-turn stock, the best thing to do is to stop stocking them. Be careful when deciding what not to restock. Some items only sell during a certain time of the year. For instance, Halloween costumes only sell in October, and bathing suits go fast in summer.
Once you identify the items with a low sales velocity, no matter the season, you should avoid keeping them in stock. You can offer discounts or special promotions so that the products move fast. You have to be strategic when it comes to getting rid of the stock.
6. Use FIFO Method
There is an inventory method suitable for every business. If you sell perishable goods, then the First in, first out (FIFO) method is ideal. The FIFO strategy means you sell the oldest products first. It is a common strategy used by most businesses. What you buy first will be the first to sell. The FIFO method is also effective for inventory-based accounting methods. It also has certain tax advantages. Arrange your stock so the older products are in front and the new ones go to the back.
7. Audit Your Stock
You must have accurate inventory management in your business. To achieve accuracy, you must have the right policies and practices, and software. Auditing your stock allows you to identify errors in inventory management. You can double-check your stock for optimal safety. You can audit your stock annually or do a year-end physical inventory. When you do the manual stock-taking, your team counts the stock and does a spot check to ensure everything is correct. The stock levels in your software may not match your stock.
Even though every business has its own way of keeping things running smoothly, inventory control remains the same. You can grow your business with the above small business inventory management tips.
