What is inventory management?
Simply put, inventory management refers to the effective handling of the inventory or stock that the company holds. Inventory management deals the flow of goods from the manufacturers to warehouses and from these facilities to ultimately the point of sale. Retail inventory management is an element of supply chain management and includes aspects such as controlling and overseeing ordering inventory, storage of inventory, and controlling the amount of product for sale. Rightly managing the inventory can help businesses have the right products in the right quantity on hand and avoid products being out of stock and funds being tied up in excess stock.
In this blog, we have discussed the techniques and best practices of inventory management for small business concerns:
Inventory management for small business
Undertake stock audits
Even if businesses own a good retail inventory management software, it is essential for these companies to undertake physical stock audits at regular intervals. This helps ensure that the company’s physical stock count matches the inventory count in the system. One of the most popular techniques of inventory management for small business includes annual, year-end physical inventory that counts every single item and ongoing spot-checking, which can be most useful for products that are moving fast or have stocking issues.
Fine-tune forecasting methods
Accurate forecasting is a vital element of inventory management for small businesses. The forecasted sales figures should be largely based on factors such as the historical sales figures, predicted economic growth, market trends, and the promotions and marketing efforts involved.
Cloud-based stock management software
It is advisable for small businesses to use a retail inventory management software with real-time sales analytics capabilities. Having a cloud-based stock management software also helps employees to access data in real-time and on the go. Such advanced software also ensures that the company’s stock levels are automatically updated and adjusted as when a sale happens, eliminating stock-out or stock overflow situations.
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One important rule of stock management is to never compromise on the quality of the product. It could be as simple as assigning a checklist to employees to do a quick examination during stock audits that includes signs of damage and correct product labeling. If damaged products reach the retail shelves or the final customers, chances are the brand name could be hampered.
Drop shipping method
Drop shipping is a technique of retail inventory management for small business; wherein, businesses can sell products without actually holding the inventory. Instead, a wholesaler or manufacturer is put in charge for carrying the inventory and shipping the products when a consumer buys from your store. This way, companies do not have to worry about inventory holding, storage, or fulfillment. Several companies venturing into online platforms adopt drop shipping methods. This supply chain fulfillment strategy can be adopted by many types of businesses across all industries.