For a small business to maximize its profit margin and perform at high efficiency, the owner must follow a solid and reliable inventory management system. By doing so, it will help you save money due to the controlled cost of operations while being able to fulfill your customers’ needs.
Not doing inventory management or having an organizational system will lead to the confusion and disarray of your business’s operations. It will be hard to calculate costs, losses, gains, and serve clients because nobody, not even you, knows what went where.
Ultimately, it would cause you, the business owner, so much stress and losses that you’ll decide to close your store. Prevent that from happening by reading the effective inventory management tips below.
1. Choose the best software or system for your business model
There are plenty of software designed for small business inventory management. Some are free while others require you to buy them. You can ask for advice from WebRetailer, Software Advice, or Capterra. But seasoned business owners will tell you to use good ol’ MS Excel.
2. Get to know your inventory
Know the cost, weight, size, shelf life, names, and purpose of the items in your stockroom. That includes knowing when to order them, how much you should order, how many do you have currently, how much was sold previously, and which type of customers they should go to.
3. Perform manual stock counts
Make sure everything is in order and all items are accounted for. Do a manual stock count regularly. You can do so every three days, every week, and every month. This is a good strategy to prevent theft, especially if you have workers or other people with access to your stocks.
4. Record the retrievals made from the stock room
Every time something is taken out of your stock room, it must be recorded on a record book and a computer. The record must indicate the item’s name, size, and serial number. Additionally, all the stocks you’ll receive must have a serial number to indicate their date of arrival and expiry.
5. Never waive the use of receipts and keep everything
I know that this is more common sense, but whether you’re buying from a wholesale supplier or selling to a customer, never forget to ask or give a receipt. It’s an additional measure to make it easier to do inventory management and keep your records more accurate.
6. Understand and accurately forecast demand
You don’t want to fill your stock room with products that would reach their expiry date without being consumed. With that said, you must predict market changes and avoid purchasing stocks that will be in low demand for the foreseeable future.
7. Identify low-turn stock
See which of the products in your stockroom aren’t in high demand. Seasoned small business owners follow this strategy so that they’ll avoid stocking up more of the items and do some marketing stunts to boost their demands.
Now that you have a system of keeping all your products in check, all you need to do is to standardize your management process. You can even take the step of adding inventory security by designing a good quality control system and using an identification system for items such as barcodes and scanners.
Read more tips about management and small businesses here!
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