How much product should you order and when?
Inventory management is a struggle, especially for new businesses with little experience in larger customer volumes. Most of the time, the person saddled with ordering has numerous other responsibilities as well, so working to become better at inventory control can add unwanted stress to an already overburdened manager. But it doesn’t have to be this way.
The first step toward knowing what to order is knowing what you already have in stock. Some businesses rely on outdated inventory tracking systems, conducting once-a-year audits to determine how much product has been lost over the year. This is an extremely costly way to handle one of the most important parts of a product-based business.
Instead, businesses should put automated inventory-management systems in place to maintain awareness of inventory at all times. Small businesses need to find the right system for their company and learn how to use it effectively. Here’s a guide to help.
The Cost of Outdated Systems
Large companies have automated their inventory processes for decades, with many using scanners to capture barcodes. Where these systems fail is in tracking items in real time, since management typically must request a formal inventory process to gain insight into how many products are on the floor versus how many have been sold or returned to the manufacturer.
Today’s state-of-the-art systems track items as they arrive and leave the store. A business’s point-of-sale (POS) system will automatically track inventory as items are sold. Since managers can access inventory information daily, they can quickly identify missing products and investigate problems before more items are lost. This cost savings typically exceeds the small upfront expenditure for an improved POS solution.
Every business has fluctuations in customer traffic. Some businesses are busiest during the warm summer months, while many others see their highest sales during the hectic holiday shopping season. As the busy months approach, businesses usually scramble to order enough products to satisfy demand.
However, if they order too many products, they’ll be left with a store full of items they can’t sell after the season, along with the cost of maintaining that inventory.
Retailers and restaurants have long relied on historical data to make those advanced decisions. If last year’s sales spiked just before Fourth of July weekend, for instance, a retailer knows to order extra products and exactly which products are likely to gain the most customer interest.
When a business owns a POS system that has inventory-tracking capabilities and reports, this information can be easily accessed. For example, QuickBooks Point of Sale powered by Revel Systems can track inventory to ensure product levels are up-to-date. Current information on sales allows business owners to make educated adjustments to inventory orders. And over time, a business can use this information to maintain a working knowledge of its own inventory needs during different sales seasons.
Most businesses regularly reorder the same products. If this means searching for those items individually and placing an order, the whole process can be a productivity drain. Businesses need a solution that allows for one-click reordering of items they need on a regular basis. By being able to see when stock is getting low on a certain item, businesses can avoid shortages that upset customers and reduce sales.
Innovation has found its way into this corner of business operations. Newer solutions automate the reorder process by triggering a product reorder once it reaches a certain level. This ensures a business already has new products on the way, often before employees even realize inventory is low. It also frees up workers to focus on other things like customer service, rather than monitoring inventory levels.
Efficient inventory management can make the difference between a business that succeeds and one that comes up short. With the right tools in place, a business can automate its inventory ordering processes and keep shrinkage rates low.