How Small Businesses Can Improve Their Inventory Management
We’re often bombarded with stories about how the retail and delivery giants are using new and innovative methods to improve their efficiency (delivery robots, anyone?). But, when you run a small business and don’t have a few million dollars to spare for novel inventory solutions, how can you step up your inventory management game?
That’s the question we set out to answer today. Read on for our take on how, in a few simple steps, small businesses can easily and affordably improve their inventory management strategies.
What is Inventory Management?
Inventory management is all about maintaining a level of stock that is sufficient to meet all customer demands without compromising other areas of the business. Whether your inventory management system is strong or weak can have a large impact on your overall business efficiency and, therefore, your profitability over time.
Why is Inventory Management Important?
Efficient inventory management is an essential part of running a business, as it ensures that you’re always able to meet customer expectations.
Common indicators that your business needs a better inventory management strategy include:
- You frequently find yourself running out of stock
- Stock frequently expires before it is able to be sold
- You are unaware of your current stock levels
- You don’t know how long a particular item has been in your warehouse
- You can’t find out your current stock levels in 5 minutes or less.
How is Inventory Management Different for Small Businesses?
Inventory management is essential for businesses of any size. If they want to avoid haemorrhaging money and stay profitable, that is. But there are undeniably some differences when it comes to optimising stock management for the small business environment.
Firstly, small businesses usually have less cash on hand to shell out for expensive solutions.
Secondly, small businesses often have to compete with businesses with more resources in terms of providing the best customer experience — all of which results in increased pressure. This means that inventory management for small businesses usually needs to focus on small, affordable changes that can be implemented easily, rather than complete and expensive overhauls.
Customer experience is also at the heart of running a small business. With a more niche and often local clientele, all of whom make repeated orders from the business, one customer having a bad experience creates a significantly larger ripple effect than for a multinational company.
This means that it is even more important to ensure a healthy and sustainable flow of inventory and minimise disruption.
How can Small Businesses Optimise their Inventory Management?
1. Conduct an audit
As we’re sure everyone would agree, it’s pretty hard to implement and measure a new system if you don’t have any idea what your starting point is. After all, you need to identify your weaknesses before it’s possible to improve on them.
By conducting a thorough audit of your current stock and measuring this against both current and historical demand, you can get an understanding of your current system’s strengths and weaknesses.
You might be overstocking goods that have fallen in popularity or are in their seasonal off-peak, or you might be running low on items with the highest demand. A thorough inventory audit will always be the first step towards understanding your business needs and building a better stock management strategy.
2. Implement Barcoding
Barcodes are amazing ways to store a wealth of information in an easily accessible way, helping you to gain greater visibility of your stock and position at any time. When you can simply scan to learn key information about a product, it becomes far easier to track the journey of stock items throughout your warehouse.
Barcodes can also be used to mark locations or bins throughout your warehouse. Because of this, barcoding is an essential tool for small businesses that want to improve their stock management, helping you get better visibility with less admin and effort.
3. Invest in a Cloud Based Solution
All things considered, manual inventory management is no longer the most efficient way to keep track of all the stock going in and out of your business.
While paper-based methods are used by many small businesses, in order to scale up you will need to implement more universal inventory management systems that allow you to oversee stock throughout large warehouses or across multiple locations.
With a cloud-based stock management solution, you can circumvent common issues with human calculation errors and lost documents with a centralised system, meaning that you can access accurate information from anywhere.
Invest in the right inventory management tools
Consider solutions like Datapel, a leading warehouse management system offering advanced features such as barcode scanning and paperless inventory tracking. These tools can provide a significant advantage in managing your stock effectively.
In conclusion, small businesses can enhance their stock management by conducting audits, implementing barcoding systems, investing in cloud-based solutions, and adopting advanced stock management tools. By making these strategic changes, small businesses can optimise their inventory management processes and improve their overall efficiency and customer experience.