At the most fundamental level, the ebb and flow of products is the very thing that keeps businesses afloat. However, it’s never as simple as that, and inventory mishaps can quickly undermine your profitability. Here’s a closer look at some common inventory management errors and how you can avoid them.
As AllBusiness explains, solid inventory practices begin with solid forecasting. Failure to do so will invariably result in under- or over-production or -acquisition, which, in turn, will lead to challenges in fulfillment. With careful calculations and timely acquisition, you can improve customer service and properly meet the demands of your market.
Forecasting gets you off to a good start, but you also need to have performance measurements in place to set standards that will save your business from efficiency issues. Fine-tuning your stock levels ensures solid profit margins, avoids outdated backstock, and ultimately keeps you afloat. This inevitably takes us to the next point . . .
If you’re still tracking your inventory with a pen and paper or even an Excel spreadsheet, rethinking this strategy is more than overdue. Relying on these labor-intensive methods sets you up for a plethora of mistakes, as human error is inevitable. Moreover, if you have a big inventory consisting of hundreds or thousands of products, it’s truly a disaster waiting to happen.
With this in mind, a good cloud-based inventory management software is a worthwhile investment. It’s a security- and future-focused measure, making automation possible. You can merge data from all resources, so warehouses, brick-and-mortar checkout counters, and online shopping carts synchronize efficiently, and you protect your and your customers’ valuable data. In the long run, it also translates to huge savings.
In the same vein, a barcode inventory system is definitely something that’s well worth your consideration. It’s a highly efficient practice that helps track goods quickly and easily. With a good barcoding system in place, you can keep more accurate records and, in turn, streamline documentation and reports. Best of all, it completely eliminates (or at least, reduces) mistakes, as opposed to manual data entry or paper-oriented systems.
Speaking of human error, entrusting your inventory and its movement to the wrong people is also a huge mistake that you will want to avoid. In fact, your investment in good systems may be rendered moot when you have people who lack the training and know-how manning the controls.
Indeed, it’s not enough to just hire people you can trust to do the job well. You want them to be the right kind of people, too, such as those with a solid background in handling inventory. You should also put an emphasis on training, regardless of the level of experience and expertise. Choose a training method that suits both your business and your staff members, and make sure everyone is informed and on the same page.
Lastly, anyone handling inventory should be made accountable, not just for the inventory under their watch, but also in realizing your business’ strategic goals. Part of the challenge here is communicating those focuses with your employees. Deputy suggests giving your staff members both the big picture and pertinent details, diversify how you deliver the message, and make sure the information is relevant to their perspectives.
Finally, don’t underestimate the need for regular and consistent inventory checks. Most businesses make the mistake of halting operations for a day or more just to do the occasional inventory. This is an outdated method that often translates to profit loss.
Fortunately, this can be avoided by doing more frequent, bite-sized audits, making it easier to pinpoint and address discrepancies (if any) without having to cease profit-making activities. If you don’t have the staff to take it on or want to avoid stops altogether, consider hiring temporary staff to tackle it.
Mishaps can quickly undermine an inventory-based business. Thankfully, errors can be avoided when you have solid inventory management systems and practices in place. Examine where there’s room for improvement, and streamline your business accordingly.