Controlling your inventory is one of the most important things you do as a business owner. You need enough on hand to meet current demand, but not so much that you build a cost-inefficient overstock. With the right balance, you can maximize warehouse space and fulfill orders on time. Here are some inventory management tips that can help you track and manage inventory effectively.
Use Inventory Tracking Software
Investing in inventory tracking software is the first step toward staying on top of your stock. This software tracks your physical inventory, as well as every sale throughout the year. In seconds, you can see how much you have on hand and how much you have coming in from your vendors. When all of your inventory information is stored digitally, you can generate accounting reports that tell you:
- Which products sell best
- The slowest months of the year
- Your repeat and highest-value customers
That information makes it easy to plan for the following month and the next year. For a small business, QuickBooks is a convenient option for inventory tracking — the inventory management tools integrate with your accounting procedures, saving you time and ensuring that your reports are accurate.
Formalize Your Order Fulfillment
In a busy company, it’s easy to fill an order and forget to subtract the item from your inventory. Before you know it, your stock is too low and you’re not sure why. That’s where a formal order-fulfillment process can be a big help. Your process doesn’t have to be complicated — it can be a simple checklist.
This covers everything that needs to happen when an order comes in, from entering the sale to shipping and invoicing. This simple step ensures that each order is processed correctly, so your inventory management is more accurate.
Sell Older Stock First
When products sit too long in your warehouse, they can spoil or experience wear. Packaging gets damaged, dust gets in, and the merchandise becomes impossible to sell. To combat this problem, you can use the first-in, first-out procedure. This means that you sell your oldest merchandise first. You can use this system with nearly any type of merchandise to save money on spoiled stock.
Audit Your Inventory Regularly
Even with efficient tracking software and formal procedures, mistakes can happen. Products get damaged, someone forgets to follow the process, or an order is short. Account for these human errors as you manage product levels by doing regular inventory audits. Once a month, or more frequently if your stock moves quickly, go through and count your products. Then, you can compare those numbers to your inventory tracking system to make sure that they line up. Audits can be a great way to find hidden problems — they help you spot and deal with theft, inefficient warehousing, or improper handling.
Great inventory management has serious benefits for your business. It helps you avoid delays in order fulfillment, saves money on lost or obsolete stock, and helps you identify opportunities for expansion. With a formal procedure, your business can grow more efficiently.