Why an Inventory Management System Is More Important in 2023 Than Ever Before

July 31, 2023

Businesses continue to struggle with holding or managing too much inventory – 34 percent of businesses report having sold products not in stock, while 43 percent of small businesses don’t even bother tracking their inventory.

This is a must-stop! There are far more than enough good-level inventory administration options available to neglect this particular part of business operations.

What's more, there are countless reasons why managing inventory correctly is vital in 2024. Read on to learn more about them.

What Is Inventory Management?

Inventory management involves everything a company needs to do for inventory control. This includes gaining, storing, using, moving, and selling inventory. Companies must have strict procedures in place to make sure none of these processes go awry.

Effective Inventory Management

If a company has good inventory management, it can avoid many issues. Some of these include:

• Having too many products
• Having too few products
• Letting certain items spoil
• Selling items that don't exist
• Buying products when it isn't necessary
• Losing products

These benefits are timeless. If you want reasons that are particular to 2023, look below.

Why Inventory Management Is Essential in 2023

2023 is different in a number of ways, and that has made old-fashioned inventory management much more workable. Provided your business has a robust process, 2023 can be the best year you’ve ever had. Here’s why.

Inflation

Because of the runaway inflation since the pandemic, prices have increased tremendously. Take June of 2022, for instance, when the inflation rate was 9.06%. The rate has subsided since but prices stayed high.

Businesses should start saving money right away. Wasting product is the first thing to cut. But before they can do that, these businesses must improve their inventory management efforts.

Environmental Concerns

Eco-consciousness is a hot topic right now. Many businesses are going green due to pressure from customers. Unfortunately, these businesses can't do that if they're constantly losing and wasting parts of their inventory.

Creating products and product elements takes natural resources. Those who understand environmental protection know we can't take too many resources. If we do, we'll destroy the Earth.

If your business starts keeping track of items, you won't need to waste resources by replacing them. You can even brag about how your lean inventory strategy has led to a better environment. Doing this can help you attract more customers.

So Many Digital Solutions

Are you still using paper inventory tracking methods? Or maybe your company is still using old, less complex software like Excel. If you continue to do either of these things, your business will soon get left behind by its competitors.

Digital innovators have created many software and hardware solutions for inventory management in the past decade. Some of the solutions you have available to you include:

• Barcode inventory system software
• Cloud-based data storage
• Predictive algorithms
• Artificial Intelligence
• Machine learning capabilities
• Automated guided vehicles
• Automated mobile robots

Each of these can give your business a unique advantage.

How to Manage Inventory Right

So, how can you improve your inventory management? There are plenty of strategies you can use. Here are some of them.

Frequent Inventory Audits

Even the best inventory tracking software can still be wrong. That's why humans need to double-check the data. They can do this by keeping track of in-stock products.

Do this as often as it seems practical. This may depend on employee availability. Automating inventory audits can help if you're short-staffed.

Some companies do yearly checks. Others perform their audits daily. You can also limit your audits to the most popular items.

Any amount of effort can lessen your inventory errors.

Analyze Your Suppliers

How well are your suppliers doing? Do they often deliver late or short of a product you need?

Track the errors your suppliers make. Note if these seem too frequent. If this happens, have discussions with your suppliers.

Are they unable to change their ways? If so, switch suppliers. Doing this can improve product quality, customer satisfaction, and more.

Predict Your Demand

Don't just write down inventory data. You also need to analyze it and look for patterns. This way, you can prepare for demand spikes.

For example, say your business sells a certain water bottle. It's reasonable to believe these would sell more during the summer. However, you'd have to pay close attention to the data to find out when the bottle sales spike the most.

You don't even have to predict demand manually. Several types of software analyze the data for you. That way, your business can make predictions for future demand trends.

Create a Good SOP

SOP for inventory management is not an easy task. But if you try hard, you will be rewarded millions of times over with the ability to scale.

Ideally, you need to create an SOP that all your employees can follow. This may involve cutting employees some slack when things don't go perfectly. Also, if you have several warehouses, you may need to adapt to several working environments.

In addition, you can't expect your SOP to remain perfect forever. You'll likely need to make several changes during its first year. Frequently analyze how your SOP performs and adjust it accordingly.

The changes you need to make should lessen as the SOP gets older. However, you can't expect an SOP to remain perfect forever. As the world changes, your SOP will likely need to change as well.

Try Our Small Business Inventory System

Now you can see why inventory management is crucial. You also have some great tips for managing your inventory. If you follow them, managing your inventory shouldn't be a struggle.

Still, you may need more help. If so, consider using our Britecheck inventory software. It's perfect for inventory for small businesses.

Sign up for Britecheck today!