Retail companies have $1.43 worth of inventory sitting around for every dollar in sales. You could be sitting on losses if you can’t move that inventory quickly.
Inventory management is a fine art. You want to have enough stock to keep customers happy, but you don’t want to have valuable inventory sitting in a warehouse either.
It’s difficult to do as a small business, especially if you depend on manual inventory or spreadsheets to track sales and stock.
Small business inventory software can help your business manage and move inventory so your business remains profitable.
The good news is that you’re about to learn all about optimizing your inventory with software. Read on to discover seven ways to improve inventory management.
1. Choose the Right Inventory Management Software
The right inventory management software will make a huge difference in your business. The wrong one can cause loads of issues and make your work even more complicated.
Start to research the types of inventory management tools out there. Think about the features you need the most.
You’ll want inventory tracking software that’s easy to use and works in real time. Inventory management system software that works across devices makes it easy and inexpensive to implement.
Make a list of items that are important to you, such as the cost, customer support, and implementation. It’ll be much easier to find the software you really need instead of investing in software that has too many features you won’t use.
2. Develop a System for the Entire Inventory Process
Inventory management requires understanding each step of the inventory process. A shipment gets received at the dock, stored in a warehouse, stocked on a shelf, or sent to a customer.
You need to have an accurate picture of what happens at each step so you can maintain accurate records.
Once you get your inventory management software system, you’ll want to create a tracking system for each item that arrives, sells, and ships.
Get your staff involved and make sure they know the importance of inventory management. You’ll want your staff to reconcile shipments and scan them as they come in.
You’ll make sure that your inventory records are correct from the beginning. You’ll then train your sales staff on how to stock shelves or fulfill orders so inventory gets tracked at each step.
3. First In First Out Inventory Management
There are various methods of inventory management that small businesses use to stock shelves and manage inventory.
One of the easiest measures to implement is called First In, First Out (FIFO). This ensures that your stock gets rotated and you match your actual costs to the retail value of the product.
With FIFO, the products that have been in the warehouse the longest are the first to go to customers when they get sold.
This is important to use because costs are increasing across the board. Let’s say that you got a shipment six months ago and paid $100 for it.
Because of inflation, the value of that order declined by 10%. If you sell those products now, you’re going to lose money unless you raise prices for your customers.
On the other hand, if you get a shipment in and sell it within a month, your order will retain its value. Your business will be much more profitable because you’re selling products immediately.
4. Identify Items That Don’t Sell
Do you have items sitting in a warehouse that just won’t sell? You probably do, and the faster you can identify them, the faster you can cut your losses.
Small business inventory tracking software helps you recognize which items are hot and which ones are not.
Once you identify items that don’t sell, you can run sales to empty the stock. That saves you on storage costs and you can order items that will sell.
5. Perform Inventory Audits
Theft and missing inventory are big problems for small businesses. One of the ways to optimize inventory management is to perform audits twice a year.
You can reconcile what you actually have in stock against what the inventory management system tells you.
This allows you to identify problems and address them before they become costly issues.
6. Perform Quality Control
Your business may have a quality problem and you don’t realize it. Items often break in shipment and storage.
That means your business pays for items that can’t get sold. You’ll need to check the quality of stock throughout the inventory management process.
You’ll be able to know when items have quality issues and address them. For instance, if items break on store shelves, you can work with your retail staff to take better care of them.
7. Forecast Sales Before Ordering
Inventory management software is an excellent tool for reporting and forecasting. This prevents you from ordering too much or having too little inventory.
It’s time to order for the holiday season. You know that you have to consider that it’s the busy season, so you’re going to need to order more than normal.
Inventory management software has data from previous years. You can look at your sales and inventory numbers.
Combine that information with the current economic environment and you’ll be able to place an accurate order.
Optimize Your Business With Small Business Inventory Software
What makes the biggest difference in your retail business? It’s not getting the most customers, but rather optimizing your inventory.
Small business inventory software lets you track stock throughout the entire inventory process. The best inventory tracking software is easy to implement and use without training.
You can use it to forecast sales, audit inventory, and so much more. The tips in this article help you manage and optimize your inventory for a more profitable business.
Are you ready for more tips to improve your business operations? Check out the blog for more helpful tips today.