Your inventory can be sizable if you run a retail business or minimal if you operate a consultancy. However much inventory you have, properly controlling the costs are an important part of running your business. You need to know when to order items, how much to keep on hand, how much you have at any given time, and what the carrying costs are. An effective inventory management system can:
- Reduce carrying costs.
- Improve the ordering process.
- Maximize order flow.
- Reduce waste.
- Get items on hand when you need them.
- Increase customer satisfaction.
Learn the ins and outs of inventory management
You'll need to know how and when to order, how to receive items, how to track stock and how to monitor sales and returns. In short, you need to have an inventory management system that can tell you at any given moment what you have on hand, what's arriving and what's going out.
Inventory Management. Find a glossary of terms and industry links at InventoryOps.com and review white papers and blogs about inventory management at Supply Chain Knowledge Base.
Know your inventory management needs
An essential element of inventory planning is knowing how much inventory you need and when you need it. It involves forecasting sales before they happen, tracking items that leave and knowing how long it will take to receive new items. A successful inventory management system will have just enough of each item to meet needs at any given time, thus reducing the cost of keeping extra stock or causing delays by running out of items in demand. The Just In Time manufacturing method distills this idea into an inventory management system that industries, such as retailing, have adopted with great success.
Get rid of excess inventory
Keeping too much stock can be a major cash drain. Items sitting for extended periods of time in your warehouse represent idle capital that could be put to more productive use. The key is knowing the minimum amounts your business needs to keep.
article by Business.com's Dan Kehrer on getting rid of excess inventory.
Get inventory management software
Most of your inventory management and control will be run through an inventory management software system. Your system will need to be flexible enough to meet your specific needs and sophisticated enough to help you control your inventory. But it should also be user-friendly so inventory management software itself doesn't become a roadblock to successful inventory control.
inventory management software and
warehouse management software at Business.com.
Get help with your inventory management system
Modern inventory management is complex but integral to success. Both the basic principles and latest techniques are often offered in seminars and courses through local schools, community colleges or agencies. The SBA and its affiliates can also offer guidance.
Small Business Development Centers (SBDC) or Service Corps of Retired Executives (SCORE).
- Look for defects: Check new items for defects or damage before adding to inventory.
- Purge your inventory: Keep track of how long an item should remain in inventory and take action to sell it or dispose of it after the deadline.
- Spot Check: You should always have a system of periodic spot checks to make sure what's in your actual inventory agrees with your lists and logs.
