Quick Tips for Successfully Managing Your Inventory as a Small Business
Inventory is a big deal, especially if you own a small business. Too much, and you’re sitting on a whole pile of unnecessary overhead. Too little, and you won’t have product available to ship when your customers want it. But never fear, as understanding inventory and how to avoid common stocking mistakes is a lot easier than it sounds.
Focus on Forecasting
Forecasting is best described as the act of predicting how much stock you’ll need to fill future orders. Let’s use a timeframe of three months as an example. To figure out how many of a particular item you’ll need in the next 90 days, take a look at your sales history. This is your sales trends. If you’ve sold an average of 10 each week, you know that you should keep roughly 120 on hand. It’s very important to pay close attention to whether this average includes a spike in volume, and make adjustments based on recent historical growth. Remember, there are few things worse for a customer than an out-of-stock item.
Track All of the Things
It’s not enough just to have items in stock when you need them. You also have to know how many you have left, if you have any similar items your customers might be interested in, where all of your raw materials come from, and who has their hands on what and when. In other words, you have to track everything related to inventory. Fortunately, you don’t have to do it all manually. Many popular point-of-sale systems, such as those offered by Square, incorporate technology that does more than process payments and track sales. They can also help you keep an eye on your inventory management method.
Hello, FIFO!
FIFO stands for “first in, first out.” This is a fun-to-say acronym to help you remember how to organize your shelves. Make sure that your stock is itemized with the longest-held where it is the most accessible. This will help to ensure that your stock is always rotated so that you don’t wind up paying to house a pile of outdated item Xs. Make sure to keep accurate records of all incoming and outgoing shipments because, as Stitch Lab explains, you’ll need this information when it’s time to calculate overall profits and financial margins.
Avoid the Wrong Item Shuffle
If one of your biggest concerns is that your customers tend to get the wrong item, there’s a problem. While you can scramble to apologize, send out the correct item, and hope they return the original product, you’ll save yourself a boatload of time and trouble by making sure that every shipment that leaves your facility is correct. It might take a few extra minutes, but you should train your employees to cross-reference the original order against the packing slip, and then check those things against what’s physically in the box.
Label Like You Mean It
One of the easiest things you can do to keep your inventory straight and make sure that your customers get the right product every time is to label your warehouse or back room. Each shelf (which you’ve already FIFOed by now, right?) should have a label that says what goes there. Clearly Inventory notes these labels should be easy to read, brightly colored, and mounted in an area where they won’t get ripped off the shelf or obstructed.
While this obviously isn’t a full primer on how to keep your shelves straight, it’s good advice, and it can help you get started. Most importantly, whatever you do, create an inventory management system that works for you. Remember, this is your business, and you know what’s best.
Writer Marcus Lansky was born with a spinal condition so severe that his parents were told he would never walk. He couldn’t have learned to walk without the tremendous support and guidance from his family, friends, and medical team. They weren’t just rehabilitators. They were abilitators. He created his site, Abilitator, as a way to reach out to those who are disabled and show them that becoming an entrepreneur is a goal they too can achieve.