2017-03-29 00:00:00 Inventory English Get these four tips on how you can save money by more effectively managing the inventory of your small business. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/06/Shopkeeper-Checks-His-In-Store-Vinyl-Collection-To-Ensure-His-Inventory-Is-Up-To-Date.jpg https://quickbooks.intuit.com/ca/resources/business/4-tips-for-successful-management/ 4 Tips for Successful Inventory Management

4 Tips for Successful Inventory Management

4 min read

As a small business owner, you know that managing your inventory smartly is key to keeping your operation profitable. If you don’t know quantities, locations, and other important information about your inventory, how can you keep stores adequately stocked or know when to order more product? The following tips and tools can make successful inventory management simple.

SOS Inventory

A variety of inventory management tools are available to help you stay on top of what you have in stock. While many inventory tools focus on scanning to track inventory, if you’re a small business with limited warehouse space or if you create one-of-a-kind products, you may prefer to take inventory manually. If so, consider taking a look at the Intuit QuickBooks inventory management tool SOS Inventory. This handy app is also of value if you run a manufacturing facility. In this case, the app lets you track your raw inventory as well as your completed products, and it also allows tracking of all your work in progress. This feature makes it possible to tell consumers waiting for customized products when their items are going to be ready.

In addition, SOS Inventory gives each item a serial number, designated location, and tracking number, so you can assess and track each item’s cost history, production speed, and general profitability. You can also compare these figures to any of the other items you’ve entered into the program. When you sync SOS Inventory with your QuickBooks Online account, you avoid the need for manual entry of each item, and you also help cut down on typing and input errors. When you create a sales order for new products, SOS Inventory is again among the best audit and inventory software, syncing with QuickBooks to create an invoice, send out sales receipts, and then update your company’s accounting records. It also integrates seamlessly with PayPal, UPS, and more to facilitate easy payment and shipping of products.

Successful Inventory Management With FIFO

The “first in, first out,” or FIFO, system of inventory management is one of the oldest and most popular inventory management systems around. The concept is simple: the items that come in first get sold first. FIFO prioritizes safety, especially with perishable items such as food. Even if you’re selling nonperishable items, your products may still have a date past which they can’t or shouldn’t be sold or used. Although the product is technically still safe to use, the packaging may be out of date, making the product obsolete. Also, the older a product and the longer it is stored, the more likely it is to become damaged.

To make a FIFO system work for your inventory, you need vigilant staff members whom you can trust to check dates when shelving inventory, pulling older items to the front and filling in newer items at the back. One or two people should double-check how your inventory is being stored to ensure this system stays in place.

Prioritize With the ABC System

Some of the items in your inventory are more important or require more maintenance than others. An ABC system directs attention to the items that need it most. To start, run through all the items in your inventory and put them into one of three categories:

  • “A” items: High-value products that don’t sell very often
  • “B” items: Goods that have a moderate value and an even stream of sales
  • “C” items: Items that have a low monetary value but sell quickly

Inventory in the A category requires constant attention because its sales aren’t predictable, but the financial impact on your company is substantial. Inventory items in the B category need slightly less attention because their turnover is fairly regular and their financial impact isn’t as significant. C category items require the least amount of attention because their movement is constant and their financial impact is relatively small.

Consistent Auditing

No matter what inventory management system you use, auditing your inventory is necessary throughout the year. It’s easy for your inventory to become disorganized by the smallest of events: a key employee is out sick, a shipment comes in late, a new employee puts something in the wrong place, or a product is recalled. Scheduling regular inventory audits to assess how well your organizational system is working helps you better understand if your system needs an overhaul and lets you catch major problems with your inventory before you waste a lot of time and money.

How often should you audit? It depends largely on the type of goods you sell and your preferences. Consider starting with a quarterly inventory audit. After a year of maintaining this schedule, you should have a good idea if you need more or fewer audits per year. Make sure that physical items match electronic records when the audit is done.

A variety of systems, tips, and tools are available to help manage your inventory successfully, benefiting both your business and your customers. 5.6 million customers use QuickBooks. Join them today to help your business thrive for free.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

Related Articles

Quebec Tax Guide: Tips and Gratuities

In Quebec, Revenu Quebec is the provincial equivalent of the Canada Revenue…

Read more

How to Sell Your Invention in Canada

Protecting your intellectual property and selling the inventions you create from it…

Read more

Tipping in Ontario: An Overview for Employers

If you run a restaurant, bar, or coffee shop, tipping is part…

Read more