Best Practices: Tracking your Business’ Inventory
Whether you own a small or large business, new or old, tracking its inventory is incredibly important. Knowing whether the products you are selling and promoting are in proper stock at all times gives you a significant advantage over your business dealings. Not only is your business prepared for orders, deals, sales, and more, but you also know that you have what is necessary to satisfy eager customers. What’s more, you can save your business lots of money when you track inventory because you always know the right amount of products to order and have on hand for each season. This means you’re much less likely to lose money by over or under producing products, keeping your profit margins in check and your spending fees reasonable. Where before small business inventory tracking rested solely on the shoulders of the owners and employees to count and keep records of what was needed, what they had, and what they sold, today there are easier ways to get the job done. In fact, there are many practices for small business inventory tracking to choose from! In this installment of our Best Practices series, we will outline some of the best practices to track your business’ inventory.
Try Out These Best Practices to Track Your Business’ Inventory
Research the Different Types of Small Business Inventory Tracking Systems and Find the Best One for Your Business Needs
As mentioned, there are a lot of options out there for inventory tracking and management. Do a quick search, and you’re sure to return so many options that you might not know where to begin. A great practice for tracking your small business inventory is to learn about these options and compare them to how your business is run and what it needs before making a decision. You know the flow of your inventory the best, and after reading a few “about” pages, you should know whether an option will work for you or not. What’s more, pay attention to the systems the options are working with. The two main systems are a continuous review and a periodic review:
- Periodic Review Systems: A period review system works when you order your products at the same time each period. When the period finishes you are able to see what you need to order more of and less of for the coming period.
- Continuous Review Systems: When working with a continuous review system, you are systematically ordering the same number of items every time you place an order. Monitoring inventory levels is mainly up to you, not the system itself, so when an item’s quantity drops below the set level, you must replenish your stock.
The periodic system may be useful for small businesses that have been around for a while and have more predictable inventory control with an established client base. However, the continuous review system will be be more helpful for small businesses that are just starting out and is used by the majority of companies leveraging inventory management software.
Always Implement Quality Control
No matter how big or small your business is, quality control is always going to be important and should be one of the systems you set in place from the very beginning. By putting a process in place that ensures the quality of your products, you can almost rest entirely assured that customer satisfaction and business growth are a given. To execute this practice, you can delegate quality control inspection to certain workers or who will work closely with products. They can check the goods that come in for the following criteria:
- Signs of damage such as broken seals, leaks, tears, dents, holes, etc
- Prices and terms of sale
- Product styles, colors, and sizes that match descriptions on the purchase order
When you have a couple pairs of eyes paying attention to these details, you can ensure that the quality of your products will meet what your customers want and deserve. If some products aren’t up to scratch your workers can then return them to suppliers and avoid any issues that might come up from sending a customer an inferior product. Finally, pay attention to the conditions of your warehouse or storeroom – it is it too bright? too warm? too cold? high humidity? Each of these issues could potentially ruin perfectly good products, so be sure to create an environment that isn’t damaging in any way.
Quality control is also just a sound business practice whether you’re tracking inventory or customer service and relations. You want to ensure that your customers are receiving the very best of your business at all times.
Use An Automated Small Business Inventory Tracking System
One of the best practices for tracking your small business inventory is to use an automated small business inventory tracking system. Human error can be pretty detrimental no matter how old or large your business is, and digital systems can help cut the risk of certain errors in half or else remove them all together. What’s more, trying to keep track of inventory without automation is just a long, arduous, and unnecessary choice. Automated systems help to streamline the inventory tracking process by promoting and maintaining accuracy, simplifying documentation (and cutting down on paper), record keeping. and saving time. Finale inventory offers an excellent inventory management system perfect for small and growing businesses. Some features included are multichannel integrations, wireless barcode scanning, warehouse management, and centralized inventory. The cloud-based system also makes purchasing and replenishment easier as well as orders and delivery records.
Optimize Your Inventory
An optimization strategy is another important aspect of tracking small business inventory. Optimization requires you to know what you have in stock and manage it well. This means that stock levels are optimized so that you can always meet customer demand as well as improve efficiency within the business. This goes hand in hand with knowing what products are popular and in high demand, and which are not so that you have enough of the former and never over-order the latter. Thankfully, this best practice can easily be managed with a system like mentioned above. Be sure that inventory optimization is always up to date so that it is controlled and inconsistencies and inaccuracies are avoided.
Set Up Cycles
Finally, another one of the best practices to track your business’ inventory is to set up cycles and ensure that they are always up to date and impactful. Before you set up your cycles, however, you have to think about the following factors to guide you:
- Which Employee Can Best Handle This?
- What’s the Counting Frequency?
- What’s The Counting Strategy?
Since your cycles are so important, you must have a trusted employee or employees on the case. This person or persons will be responsible for running the cycle count system on a tight schedule so that it is always up to date and nothing ever slips through the cracks. The counting frequency will depend on how many counts your employees can get through each year. When you have the frequency down, you can monitor the effects cycle counting have on manufacturing, receiving, and the delivery process of your products. Finally, the counting strategy can be built once you have your frequency figured out. From here you can plan whether to divide inventory and how. Some businesses divide inventory between locations while others do so by category, item, and/or value. Again, you want to find what works best for your business to know how best to track inventory.
These practices can be tried together or you can choose one or more to implement with your business. Remember that keeping track of your small business’ inventory is one of the main things you can do to sustain your business’ growth and development.