When first thinking about it, the idea of doing inventory might seem fairly simple. You might just think that it is counting how much you have of some particular product.
However, it is actually a lot more involved than that. By knowing how to do inventory, you’ll be able to account for the items in your warehouse, the raw materials that you need to produce those items, and other supplies and equipment that keep your company moving.
Keeping track of inventory isn’t just accounting inventory. You will also need to predict what you are going to need so that you can make sure you don’t run out of materials. This is especially important in an important where the supply chain is extremely fragile.
If you order too many materials, then you’ll be left with more inventory than you can sell. And if you order too little, then you’ll suffer from shortages and unhappy customers.
Luckily for you, we are here to show you how to do inventory for small businesses. So keep on reading and we’ll take you through all of the inventory tips that you are going to want to know!
Use the Inventory Method That’s Right for Your Business
There is no such thing as one inventory method that is better than all of the others. This is because all businesses are different. For example, a company that sells perishable items, like coffee or flowers, would need to sell the inventory that they purchased first.
This is referred to as the first-in-first-out (FIFO) strategy. When you employ this strategy, your oldest products, whether that is bread or fruit, will need to be sold first. Most businesses utilize this strategy so that they can get rid of old items and bring in new ones.
Understand and Accurately Predict Demand
One of the main aspects of effectively taking stock of inventory for business is by gaining accurate forecasts. An inventory manager is going to rely on data to help track items. This includes predictive technology, seasonality, market trends, and records of past sales.
Of course, inventory managers will also need to consider other factors, such as shifts in demand, the state of the economy, the weather, and more.
The better forecasts you can draw up, the better you will be able to match inventory to demand.
Identify Low-Turn Stock
No matter where you are within the supply chain, you can make the whole process efficient by recognizing low-turn stock. You can then adjust your output and even discard products that aren’t bringing in enough revenue.
For example, if the inventory manager sees that a certain product is just sitting on the shelf, that they may conclude that demand for the item has waned. Or they might point out that more marketing is needed in order to sell the item.
The sooner you can find stock that is not moving quickly enough, you give yourself a better chance of turning things around and selling the item before it becomes worthless.
You might want to sell the stock to a third party, transfer the item to another location, or try a special promotion to move the inventory.
Track Stock Levels
It is very important that you know how much of each product is at your disposal at any given moment. This is true whether you are selling goods to clients or you’re in the research and development stage.
You need to have an inventory cycle counting process that is consistent and well-documented. You can use an Excel inventory template with formulas to help you with this. This is going to help you minimize your mistakes and make sure that all of your information is accurate.
You should create automatic reminders in your inventory management system so that you can know when more products will need to be ordered. You’ll also be able to monitor demand for products when you track your stock levels.
Focus on Quality Control
While you are keeping track of your inventory, you also need to think about quality control. This is why companies should utilize quality inspections at all parts of the product lifecycle to minimize waste. They can also make sure that their products continue to meet their standards.
Invoice matching and accurate ordering are very helpful in this area. You also need to make sure that all of your workers understand and abide by your processes in order to keep quality up.
Speaking of employees, these are the people who are actually going to be handling your products. You need to foster a culture from the top that shows that taking good care of the inventory is extremely important. Take employee surveys to get a sense of what your workers value and if you need to boose morale.
Happy workers are productive workers, after all.
The Importance of Knowing How to Do Inventory for a Small Business
Hopefully, after reading the above article, you now understand how to do inventory for a small business. As we can see, there is a lot of work involved. But doing the work upfront will save you time and money later on in the supply chain.
This is why it is so crucial that you keep accurate track of your inventory and identify issues as they come up.
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