This blog is submitted by guest author Marcus Lansky, Founder, Abilitator.biz
Poor inventory management can cripple your small business’s productivity and hinder its bottom line. An estimated $300 billion in revenue is lost every year in the retail sector due to poor inventory management — and that’s not to mention the cost of reduced efficiency and increased overhead when your business can’t manage its inventory properly.
Despite the importance of efficient, accurate inventory management, a shocking number of businesses big and small are still relying on outdated, error-prone inventory management systems. If your company is still making these common inventory mistakes, it may be time to upgrade your inventory management system.
Manual inventory management may seem affordable on the surface, but the hidden costs are staggering. Relying on manual counting and data entry is not only time-consuming, but MYOB notes it’s also highly prone to human error. Those errors can be costly when they lead to inventory overages or shortages and misplaced products. Manual inventory management systems also make it challenging to see the big picture of your business’s inventory management practices and improve for the future.
Switching to barcode inventory solves many of these problems by reducing opportunities for data entry mistakes, making it easier to monitor inventory, and streamlining the inventory reordering, transfer, and reporting processes. While switching to a barcode inventory system represents an investment for small businesses, it’s a relatively affordable solution compared to RFID inventory systems and has enormous potential to reduce loss.
Whether your business is carrying too much inventory or too little, you’ll pay the price for poor inventory forecasting. Inventory overages cost small businesses in the form of increased warehousing costs and the need to mark down products in order to move stock. Inventory shortages, on the other hand, cause the business to miss out on sales — and the costs don’t stop there. Not only do stock-outs lead to lost sales, but Supply Chain Dive points out they also contribute to declining customer satisfaction and the defection of formerly-loyal customers.
Accurate inventory measurements with an automated inventory system like a barcode system is the first step toward better forecasting, but it’s not enough for forecasting year-round and year-to-year demand. For that, small businesses should invest in inventory management and demand forecasting software that allows them to analyze trends at both the macro and micro levels.
Businesses operating from multiple locations or running both e-commerce and brick-and-mortar stores face another inventory management challenge: ensuring their data is accurate in real-time across all locations. While adopting inventory management software solves the problem of employees in the same building having access to up-to-date inventory data, it doesn’t always eliminate the challenge of maintaining stock levels across multiple locations.
Failing to synchronize data could cause stock-outs in one warehouse while another sits on excess, or result in customers ordering out-of-stock items via an online store. Cloud-based software solutions simplify inventory management for multi-location and multi-channel businesses by automatically syncing data across all locations and permitting access to inventory data no matter where you’re located. Cloud-based software is also, by and large, more affordable than on-premises software solutions.
It’s important to remember that a business is only as good as its warehouse management system. Without a solid strategy for an organized warehouse, you set yourself up for problems that can quickly become insurmountable, possibly leading to a failing business.
For maximum efficiency, a solid operational system is a must, and it should be helmed by an experienced warehouse manager with the skills to keep your warehouse running like a well-oiled machine. The best managers will easily navigate the ebb and flow of warehouse procedures, in addition to knowing your warehouse inside and out, from the inventory to the employees to the technology. This is an investment you can’t afford to ignore.
Effective inventory management is central to every aspect of your business’s success, from minimizing overhead costs to increasing customer satisfaction. While manual inventory management may have worked well for your business in its early stages, there are major limitations to what you can accomplish with manual processes. The market abounds in software solutions that offer automated and streamlined inventory management. HandiFox is one of those tools that can help you track, count, transfer, forecast and sell inventory across multiple locations from one platform. Review, do your due diligence, shortlist, trial and evaluate your options.
If inventory mistakes like these are hurting your business’s bottom line, take the next steps to upgrade your inventory management systems to reduce errors and improve accuracy, efficiency, and your capacity for growth.
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