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Inventory Management: How To Handle the Blur

Welcome to the beginning of the Hello-it’s-Spring-no-wait-Easter-I-mean-Memorial-Day-and-what-do-we-have-where season! Are you ready for the coming sales and promos sure to boost profits into the coming summer months…and the Fourth of July…and back to school…and the never-ending procession of stock from the storeroom to the shelves to the bargain bins to… Help! Does it feel overwhelming when you try to inventory your merchandise? A better question might be: Do you inventory at all? If not, you’re not alone: Eight percent of small businesses survey for the 2017 State of Small Business report admitted they don’t track their inventory. Of those that do, 35 percent use some sort of manual process (or other individualized method). Only 18 percent used an inventory system like InventoryCloud to help ease the process and boost its efficiency! If you don’t fall into that last category, you should – and don’t worry, it’s never too late to change a habit! You should already know: If your business deals with the sale of goods, you simply cannot make money without inventory. You make your orders, stock your shelves, move your merchandise to the back room, and…what? Let it sit until you need more on the shelves? Reorder when you notice your supplies drifted away to barren shelves? Keep just enough back to keep you covered for average consumption? [Tweet "If your business deals with the sale of goods, you simply cannot make money without inventory."] The last option isn’t working so well for some of the big names: Whole Foods instituted an order-to-shelf (OTS) system in its 473 locations in early 2017. Under the principle, product goes from the truck to the shelves with little (if anything) left over for the storeroom. While this led to a 25 percent decrease in backstock, customers continue to complain about empty spots where their favorite products should sit. OTS also shifts ordering power from locals to the corporate headquarters, which eliminates colloquial preferences from much of the restock order. OTS might work on a small business scale if you keep a small, loyal following and your stock orders remain relatively stable time and again. What happens, though, if your hometown goes through a growth spurt and a sudden influx of people discover you? You might find yourself in the same position as several WF stores: Barren shelves and unhappy customers. Inventory management can be a time-consuming process: Hand counts take hours away from other pertinent business; spreadsheets allow for one user at a time and can be thrown awry with a simple keystroke. Automated systems slash the likelihood of mistakes and paperwork involved, but where do you even start to choose such as system? First, stop and take a look at your business: Why do you need this system? Are you running into problems with inventory going out of style, out of season, or out of use before you can move it? Are your shelves too empty, both in the sales room and the storeroom? Is your crystal ball out of focus for seasonal forecasts? What exactly do you need? Plenty of options come with inventory management systems, a number of bells and whistles that might serve you no good whatsoever.  Where do you need to work on your inventory skills: Ordering? Dynamic information? Categorization? Look at your current inventory methods (if any) and mark in what you found missing, then look at your management options. How can this system help you? Will you need to purchase any additional equipment or software? On the matter of “purchase:” How much are you will to spend for your system? Money’s tight when you’re a small business, but sometimes you face a choice: Pay less now but pay again for something better when your business expands – after all, you don’t plan to shut your doors, do you? – or pay more now for something that can grow with you. Expenditures like barcode printers and scanners and mobile computers may seem extravagant at first but will earn their keep in no time! The third focal point in your choosing scheme: The human factor. You and your employees need to learn how to use this system. How long will that take? Can you request on-site training or is online more practical for your organization?

Related Article: 3 INVENTORY METRICS TO COUNT ON

Your people: How will they take the change? Chances are, pretty well: Easy training (on site or online) and a task made easier will sweeten them to the new system. They can be freed to handle other matters, maybe even some duties you previously kept to yourself? Customers will appreciate the updates, too. The increased spend and efficiency in the retrieval of information on products they want to purchase will make them more satisfied with your company. Increased satisfaction means a better chance of a return customer. You can also use your inventory management system to forecast your business needs around seasonal specials. You’ll be able to avoid shrinkage through write-offs and write-downs because of overordering or unhappy customers through underordering and empty shelves. You can also rest a little more soundly: An inventory management system can help clue you into strangely depleting stocks (thanks to shoplifting or shrinkage). Barcode point-of-sales scans automatically update your database. Any discrepancies lead to investigation. Think of how much easier your annual (semi-annual, quarterly, or however often) inventory will become! Add in your purchase costs and your retail sale price to calculate your real and recorded values to see if you suffered from mysterious disappearances or to figure out your profit margin. How do you track your inventory now? How do you think an inventory management system like InventoryCloud could help your business move ahead?