Why Your Small Business Inventory Is Struggling
Inventory management is a struggle for many small businesses. You believe your business will be easier to control and profit, only to realize that you’re missing many of the tools and resources that help other businesses thrive. Why is your small business inventory struggling? Simple: You don’t have the right tech.
This is the saga for many small businesses. If you want success with your inventory management, embrace the technology available. That being said, it is imperative to count on efficient production and distribution systems. Reached that point, then it is time to implement a proven Vendor Managed Inventory strategy. You don’t want to miss any detail of these complex processes when it comes to keeping a healthy production ecosystem. As you do so, here are some mistakes you don’t want to make.
You don’t have an inventory management team.
It’s really easy to let inventory management slip through your fingers as a small business owner who wears a lot of hats. But inventory management is one of the most important components of any business, and you need a dedicated team to strategize and carry out your inventory goals.
Daniel Taylor of LeanDNA, an inventory management organization, calls this an Inventory Attack Team.
“The goal of an Inventory Attack Team is to hold everyone accountable and ensure each site has a similar amount of actions to complete,” he says. “…The key is to make it easy for your team to identify the top actions. You don’t need to boil the ocean. It’s not necessary to solve everything at once.”
As your team pinpoints both areas of success and places that need improvement, you’ll be able to make small, reasonable goals that will steadily bring your inventory up to where it needs to be.
You don’t use digital tracking tools.
A shocking 15 percent of small businesses use pen and paper to track their expenses and about seven percent of small business that have inventory don’t track it at all. Another 24 percent said they use a spreadsheet to track inventory, which is better than nothing, but not nearly as efficient as it could be.
Only a third of small businesses report using an inventory management system, which is shocking since poor inventory management is one of the top 10 reasons small businesses fail.
The right digital tracking tools can turn this around for your business. Inventory management systems that can be accessed on the cloud or as a downloaded application will allow you to monitor your inventory every time a barcode is scanned.
It will also alert you when you need to order more product. Some systems will automatically order products for you when you reach a certain point. With such a tool in place, you can remove some of the busy work from your supply chain operations and ensure stable inventory.
Your analytics aren’t being used to help you forecast.
If you’re using inventory tracking tools properly, you’ll be able to see data regarding each product. This essential data can help you forecast trends stocking your products according to what customers will want. Failing to forecast inventory trends will lead to shortages and surpluses, both of which cost you.
Saloni Doshi, owner of EcoEnclose says that forecasting is particularly beneficial around the holidays.
“You need to be careful in your planning to avoid overstocking or having products on backorder and losing potential sales,” she says, recommending the construction of a reasonable forecast for your fourth quarter sales to predict holiday needs. “…You may decide to be aggressive with your forecast if you have a solid cash position, ample storage space, and produce goods that can be sold after the holidays are over.”
Using this forecasting, you’ll have a good idea about the products you’ll need to fulfill your holiday orders. This careful planning will save you a lot of heartache in the long term.
You never manually audit your stock.
When was the last time you took a manual audit of your inventory? Tech tools are fantastic, but they’re not fail proof.
“Even with good inventory management software, periodically you still need to actually count your inventory to make sure what you have in stock matches what you think you have,” says an article from Square, Inc. “Businesses use different techniques, including an annual, year-end physical inventory that counts every single item and ongoing spot-checking, which can be most useful for products that are moving fast or have stocking issues.”
Nobody likes inventory auditing. It means long hours and hard work, but you can make it easier with incentives for your employees. A well-planned inventory process and procedure throughout the year will also make your yearly audit a breeze.
Image Credits: Business Inventory from PhuShutter/Shutterstock