Fine-tuned inventory management is a crucial determinant of success for small and established businesses alike. Even if you’re the most thriving company in your industry, you still can’t neglect inventory’s value in your business operations. Typically, inventory management covers order placement, tracking, and shipping. Especially for up-and-coming start-ups, mastering the art of inventory management can provide a host of benefits. For instance, you can amp up operational productivity, increase storage efficiency, and handle your stock better. Following are some valuable tips to guide your hustle and improve your inventory management practices. 

Choosing An Inventory Management Software

We’re living in the digital age, so it’s only logical to invest in decent inventory management software from the get-go. When improving small business inventory management is concerned, nothing compares to cloud-based software. You can find plenty of options out there that facilitate start-ups in digitizing their inventory processes. Digitizing inventory can lead to better inventory tracking, inventory analysis from multiple mobile devices, and accurate demand forecasts.

 Categorize Inventory

Greater insights and visibility into inventory levels can make or break a small business. ABC analysis or selective inventory control is an industry-tested approach in this regard. Besides helping differentiate between high-value and low-value stock, it also recognizes the unique worth of individual inventory. ABC analysis helps companies focus on and prioritize the most critical inventory and investment options in their portfolio. By doing so, a small business can capitalize on warehouse space, discover suitable suppliers for raw materials, and create optimal pricing models. Remember cloud-based software? Most of them can support or even provide ABC analysis.

Set Up Inventory Storage

Storage is a vital aspect of any inventory management strategy. Regardless of your location, you must ensure that your inventory remains secure from theft, damage, and spoilage. Also, ascertain that you’re able to track and ship it from the storage location without hindrances. For example, most Floridians have to experience an unfair share of hurricanes and other natural calamities. For a furniture start-up, water damage is fatal. However, investing in a storage unit such as furniture Storage Units in Leesburg can take that worry away.

Moreover, if you organize your warehouse correctly, it can streamline overall business operations. In contrast, a disorderly warehouse can have costly outcomes, including inventory losses and decreased revenue/customer returns. To be better organized, try exploiting vertical space, maintaining proper heat/light/temperature conditions, and labeling your stock. 

Employ The FIFO Method And Identify Slow-moving Stock

If you’re a small business, experts recommend that you stick with the first in, first out valuation method. This method reserves merchandise’ freshness and greatly minimizes items going past their expiry by selling off items in their chronological purchase sequence. The first step is to know your best-sellers and create such an ordering schedule that you never go out of stock.

You also need to identify slow-moving stock and find ways to churn it out. You may lower its price, return it to the supplier, or shift it to another location. For this reason, small businesses need to develop a solid strategy to sell undesirable goods and cope with seasonality. The more unproductive inventory you have on hand, the less capital and space you’re able to invest in other profitable business prospects.

Make And Review Forecasts

For most businesses, accuracy is a major concern when forecasting future sales. Overestimation of sales may result in excess, usually futile, inventory stock and higher holding costs for storage. An underestimation may cause you to run out of in-demand products and lower customer satisfaction. A well-structured forecasting model facilitates regularly-timed inventory orders and helps you meet business needs with reserve stocks for any contingencies. With a fixed ordering schedule, companies can keep their inventory levels in line with their demand. Plus, reviewing forecasts and projections makes you more adaptable to evolving and unpredictable market trends.

Track Inventory

Nothing in inventory management deserves more attention than tracking inventory. Miscounting stock is the biggest mistake most start-ups make. But it’s inevitable as the risk looms everywhere, from shipment to staff usage to order fulfillment. Besides, businesses also have to be accountable for damaged or broken goods.

Small businesses can gain considerable advantages by using electronic inventory systems, such as staying on top of their inventory levels. To get the most out of these systems, you should link them with your point-of-sale (POS) software system. Then, you may employ the system for random stock checks and maintain your inventory count’s accuracy.

Use Dropshipping

Since a dropshipping business’ products are sent directly from the seller to the buyer, internet availability is the only condition to conduct business operations. Compared to conventional warehouse storage, dropshipping enterprises can do without acquiring or renting storage space which starkly reduces overhead expenses.

Dropshipping also allows for significant savings in terms of location. The only requirement is a mobile device, aka a laptop or smartphone. When coupled with an inventory management system compatible with dropshipping, you can view your inventory from even the remotest corners of the world.

Optimize Inventory

As your business grows and incorporates basic inventory management tools and software into its operations, you should also consider inventory optimization. Inventory optimization entails finding out the exact quantity needed to meet consumer demand without delays in order fulfillment or high storage costs.

Balance is king here. You must figure out the sweet spot where there’s no excess or shortage of inventory. Excess inventory can lead to unnecessary acquisition, shipping, and holding costs that cause cash flow squeezes. Lack of necessary inventory leads to disgruntled customers and potential sales loss due to lack of in-demand products.

To Summarize

In an entrepreneur’s book, inventory is the most-valued asset; there’s no business prospect without it. This article discussed some convenient tips for small business inventory management that ensure your business’s long-term viability. These include using inventory management software, inventory tracking, ABC analysis, FIFO method, and forecasting models. 

Effective inventory management can cut costs, increase customer satisfaction, and let you operate with increased visibility about your stock’s status and sales potential.