Tips for Implementing a Successful Inventory Management System

February 27, 2023

Are you digging through piles to find out what you have in stock? If you are it's time you implement and use a successful inventory management system.

The system keeps track of where your inventory is to help you figure out when you'll need more. It also simplifies internal logistics like receiving.

And although they seem like a mystery to small business owners, they actually thing: a proper system. Not sure what they are, or how to implement them? Here are several tips for small business owners who need to know.

Understanding the Importance of Inventory Management

Firstly, I think it is important to understand why it is important for a small business owner to look into "setting up a successful inventory management system". A successful inventory management system is vital for the smooth running of a business. It is also essential in meeting customers' requirements on ordering of supplies of goods ordered by them. It is also a means of enhancing profitability due to the obvious fact that the less and the cheaper stocks maintained, the better it is for a business.

Lack of proper inventory planning may lead to problems such as overstocking, stockouts and surge of costs due to wastage of products or obsolete stock. Tying up capital and storage space increases the risk of product obsolescence and cascades into high carrying costs. On the other hand, understocking may lead to stockouts, customer irksomeness and missed opportunities.

A small business inventory management system can facilitate this by automatically tracking stock levels, forecasting demand and managing inventory control, so you have precisely the right amount of stock at exactly the right time, to reduce stockouts while minimizing idle inventory.

Assessing Your Business Needs

If you are considering some sort of inventory management system for your business, step one is that you need to consider your business needs and objectives. What does your business require to move the inventory, or is it a product only that your business requires? For example, if you are in an industry that needs to comply with the industry rules and regulations, the system that you end up choosing should be a system that helps and enforces you to comply with those rules and regulations. However, if your business is relatively small and does not have a large number of finished goods, you do not need a system that isolates and limits your stock to individual pieces (say like book inventory database where you have to log in each book separately), you can explore retail pos options. In terms of stock turnover and order fulfillment, if your business relies on a sales order, then you should not go for an inventory system that isolates your stock at item-level.

Each business is different in itself; not all inventory systems are the same. Some businesses, like retail or e-commerce for example, may require a real-time inventory system to keep up with customer demands.

Others may specialize in demand forecasting or supplier management. Understanding what your business needs, you can pick a tool that best matches your goals.

Researching Available Inventory Management Tools

After taking stock of what you need right now, you can start checking out inventory management tools to buy. There are plenty of them, ranging from simple Excel spreadsheets to full-featured cloud-based systems.

Do some research based on key features such as real-time tracking, inventory forecasting, order warehouse management, integration abilities, as well as user-friendliness. Real-time tracking allows you to have updated insight into your livestock. This in turn enables you to make knowledgeable decisions on when to restock your items or ship orders.

Inventory forecasting uses historical data and algorithms to predict future demand, optimizing your inventory levels so you always have what you need to fill each order.

Ways to Streamline Production

However, small business owners need to take some steps to implement an effective inventory management system.

1. There is a need to track all inventory movements. Keeping a record helps identify areas of inefficiencies and then to enhance production system.

2. In addition to that, it is important to know customer demand. If you know how your customers want your products you can be sure that you always purchase those products and they are always available or stocked adequately.

3. Small business owners must also keep accurate records regarding inventory. This information includes dates products were received, stored room, and shipped out.

Investing in the Right Technology

If you do your homework and find what's out there, you should now use it, it's time to buy the technology that's best suited for your business. If the system is affordable, that's great, but you shouldn't compromise on functionality and scalability.

Cloud-based inventory management systems allow you to track and manage inventory on the go, via the web browser, anytime and anywhere. These systems are giving your data the storage space they deserve on the cloud, and sparing you from the pain of physical servers and IT infrastructure on premises.

Using cloud-based systems, you can check your inventory from wherever you are: at the office, at a warehouse, or even on the road traveling for business.

Automation is another key feature of the right technology. Automate stock updates, order fulfillment and reporting with an inventory management system. Automating processes through technology saves you time, avoids human error and eliminates the need for manual data entry.

Organizing and Categorizing Your Inventory

Before establishing the inventory management system, it is important that you classify and compartmentalize your inventory. Otherwise, maintaining an overview of the warehouse becoming hard and accumulating enough stock to sell will be difficult.

Firstly, assign a stock-keeping unit (SKU) for each product. Stock-keeping units (SKUs) are codes that are used to identify and track individual products in your inventory system. This helps to keep track of your inventory, as each item has a unique identifier associated with relevant information such as product description, cost and stock level.

Training Employees and Defining Roles

However, employers should provide training programs to employees who are going to have new system to ensure they are able to use it properly and efficiently. A inventory management system won't work probably unless employees are trained on how to use the new system correctly.

Firstly, all employees – particularly those in the warehouse, the inventory control, or those who enter or get data from the system – should undergo full training sessions on the system. This includes the functionalities of the system, its workflows and processes, as well as the general best practices when managing inventory.

Roles in warehouse management

In addition to training, you need to define jobs and responsibilities. You need to clearly identify who will be responsible for each important activity in the warehouse management such as inventory updating, purchase orders, stock reconciliation and so on.

Plan to provide refresher training on a regular basis to keep your people informed about system upgrades and added capabilities. Schedule this training to review new features and best practices as they become available; this guidance will maximise your team's use of the inventory management tool to propel your business forward.

Integrating Inventory Management System with Other Business Processes

To make your organization processes more efficient and boost productivity, the inventory management system has to be interconnected with other important processes and procedures of your organization.

Integrate your inventory management system with accounting software to automate financial operations. Link your sales and purchasing software so that all orders are processed and the stock situation is updated automatically and the customer data is managed properly.

Seamless integration reduces double entry of data, reduces human error and gives a view in all of your systems for a real-time picture of what's happening in your business and how much inventory you have (or don't have) on hand. By integrating the systems, every time data is input into one, it's instantly shared among all systems.

In conclusion, a good inventory management system can assist small business leaders in terms of their operation. They can follow the tips mentioned above in order to get the best from their inventory systems. By doing so, they can save money, reduce waste, and make sure that stock is always up to date. Introduce these tips now so that you don't get into trouble arising from inventory.

Britecheck is the solution to this: contact us and realize what's the best for your business.