You must pay attention to managing your inventory if you want your small business to succeed. We will explain inventory management, how it works for small businesses, the benefits, and how to do it efficiently. Strategic inventory management, which includes using the right tools, such as a POS system with inventory tracking software, will help you run your business more efficiently and keep your loyal customers coming back. One of the best ways to grow your business is to improve your inventory management.
What is Inventory Management?
Inventory is the product you intend to sell. Inventory can also include the materials or tools used to make your products if you are a small manufacturer. In a bakery example, inventory would include all the products currently in stock and any flour, eggs, sugar, and other ingredients. For most retail shops, inventory is easier. Inventory is the stock in your backroom and on your shelves. Inventory can only be managed by itself. Inventory management is an ongoing task for many businesses. At its most basic, inventory management is about keeping track of your stock and knowing when you should order more. You must also pay attention to key performance indicators to ensure that you are aware of how different products are sold to make informed decisions regarding which products you will carry in the future.
What does this look like for Small Businesses?
Managing inventory varies from one business owner to the next, depending on what products you sell and how many consumables you have. Let's look at the inventory management process for a few small businesses we work with.
- Convenience shops: C customers are looking for a convenient place to quickly get the items they need without going through a large-box store. Monitoring the sales of products in convenience stores is a key part of managing inventory. Every spot on your shelf has value. You want to only stock items that you know the customer base will want.
- Boutiques: Boutiques may carry unique, carefully selected items. They may not have a consistent inventory list. Managing this inventory is different to managing inventory at another shop. You want to keep up with the latest trends in your boutique and stock only a few items that you might have to clear out.
- Tobacco and liquor stores: Liquor and tobacco shops carry a limited range of merchandise. However, there are still many opportunities to improve your product offerings. You can replace a specific type of cigarette or a brand of whiskey that isn't selling well with products that will.
- Grocery shops: Supermarkets and grocery stores often have a long list of SKUs, which can include a lot of perishable items. You can only throw away inventory that has been used because of its short shelf life. Customer service looking for specific ingredients for a particular recipe will not be disappointed.
- Beauty Salons: Retail shops are only some businesses that have to manage their inventory. You likely have hair, skin, and nail care products available at your beauty salon. It will help if you manage your inventory properly, no matter how focused your business is on selling products.
The Benefits of ERP
Inventory management can be a complicated process. If not handled properly, it could have ripple effects that will negatively impact your business's reputation and revenue for many months.
This can be overcome with an efficient inventory management system. It automates the tracking process and provides real-time stock movement insights. Forecasts are also made possible, as well as helping to prevent excess or inadequate goods. Let's now look at the advantages of an inventory management system for small businesses.
Optimize Warehouse Layout to Minimize Storage Prices
A good inventory management system will help you optimize your storage units. This system allows you to map your warehouse, categorize products and allocate storage bins accordingly.
To ensure that you receive timely updates about stock levels and inventory movements, the warehouse management system can integrate with the RFID scanner or barcode scanner. This increases warehouse space utilization and decreases storage costs as it is cost saving.
Up-To-Date Information Helps to Increase Business Revenue
You need to be able to identify the stock and determine which products are most popular when it is time to restock, what order you should place, etc.
Inventory management systems provide all the details at a glance. To plan your spending more efficiently and increase revenue, you can view all sales orders.
Automated Inventory Tracking
Software for inventory and sales management automates manual tasks such as updating stock information, tax calculation and invoicing for all purchase orders. This software helps you to save time and eliminate manual handling errors.
Manage Multiple Offices
You need a flexible and flexible cloud-based inventory management system that allows you to see all of your offices at different locations. The cloud platform allows you to sync all your business information into one database, which makes it easier to manage and monitor them efficiently.
Learn Market Trends and Boost Product Availability
To ensure that you have enough stock to meet your needs, it is important to know the current and future demand for the commodity. Advanced inventory management systems include data analytics tools that gather information from point-of-sale and customer transactions to provide deeper insight into market trends. It helps improve product availability.
Increase order accuracy and Customer Experience
A well-designed inventory management system will ensure that the correct goods arrive at your customers when you need them. This will make your customers happier and result in more repeat buyers.
To Grow your Business, use an Inventory Management System
A good inventory management program can bring you many benefits. A good inventory management software can help you to manage changing market conditions and reduce costs. The system can have a significant impact on your bottom line. It will make your business more profitable, efficient, and better equipped to serve customers.
How can Small Businesses Manage Inventory?
Many small businesses rely on inefficient, poor methods or have no system to manage their inventory. This is a problem, as inventory management can make or break your company's success. Let's not get into the potential consequences of poor inventory management. Instead, let's look at the benefits that can be expected when you use strategic methods for inventory management workflows. You can achieve great results by managing your inventory counts correctly. This will make your life easier:
- Don't rely on guesswork or intuition anymore: You will know how much stock you have and when you should order more if you keep track of your inventory. You can predict the future more accurately and make data-driven decisions when you are well-informed.
- Save money!: When you can accurately predict what products will sell and remove unpopular SKUs from product lines, your company can save money. You can save money, especially if you sell perishable products that might be thrown away. Financial tools' success is all about maximizing sales and eliminating waste.
- Space savings: Managing stock efficiently does mean not only financial savings but also space savings. Stock storage space is often limited for small businesses. Small businesses have to use this space efficiently and avoid overcrowding it. You should only store what you use and make the most of your storage space.
- Customers will be happy: if they find the products they love at your business and are confident they will be available in stock. Customers will be grateful that you are there to help them, whether they're looking for the perfect brand of Prosecco or their favorite pet food at their local convenience shop.
Read More: 5 Promising Warehouse Inventory Management Tips for your business
What Happens if You Don't Manage Your Inventory
Although we've already seen the benefits of managing your inventory well, you might still be wondering what it would be like to run your business without a focus on inventory management solutions. These are the common problems businesses face when they need to properly manage their excess inventory.
- Financial waste: If you properly manage your inventory level, it is easy to make good purchasing decisions and end up with too many or too few products. You can throw your money away if you have too many perishable items that need to be sold. Non-perishable items can be placed on clearance and sold at a loss.
- Missed Sales: Another scenario is when you don't have enough stock of a product because of poor inventory management. Stock-outs can lead to lost sales. Stock-outs are often caused by poor replenishment and ordering practices. Missed sales equal lost profit. They can also lead to unhappy customers. We'll talk more about this in a moment.
- Cash flow problems: Waste is one of many financial results of not managing your inventory. Cash flow problems can also be expected. You can expect to deal with cash flow problems. Any inventory you have on your shelves is money that you have spent but have yet to make any profit from. It is a common error to purchase too much stock. This results in your money being held in inventory instead of being used for meaningful purposes.
- Chaotic stockroom: Mismanaged stock will not look neat or fit in your stockroom. A chaotic stockroom is likely to result from the inability to purchase inventory and organize shelves. This can cause injuries to you and your employees. It can also make it difficult for the stock to be pulled or to know where the back is.
- Unhappy Customers: Another inevitable result of not managing your inventory well is upsetting customers. If a customer buys a physical product that they like at your store and then it goes out of stock for a week, it could mean the end of their shopping experience with you. Customers may still be unhappy with your product selection, even if you have items in stock and need to pay more attention to what sells.
How can you Manage your Inventory Manually?
Some companies still use manual inventory management process. This means that they keep a spreadsheet on their computer. Columns should be dedicated to fields such as the product name, SKU, and current stock. This number should be adjusted each real-time when a product sells or arrives. This is a difficult goal to achieve, and the end result is that your spreadsheet numbers often need to be updated. This is not just because information becomes obsolete quickly. There is also a lot of room for human error with this manual method.
A study found that inventory tracking accuracy was only 63% for retailers. It would help if you implemented periodic checks to ensure that your spreadsheet information doesn't drift too far from the truth. Manual inventory tracking should include regularly counting inventory to update your records and reduce discrepancies between what you recorded and what is in stock. You should audit your stock levels at least once a month.
No matter how you track inventory, periodic checks are a good idea. Keep in mind that inventory management is more than just keeping track of numbers. It is about making decisions. You can use an ABC analysis strategy to make informed decisions about inventory management. This method involves classifying your inventory into three categories.
Class A is for popular products that account for around 80% of your revenue. Class B is for inventory with marginally high customer demand and accounts for 15% of revenue. Class C is inventory that moves slower and accounts for only 5% of the revenue. You will need to collect and analyze lots of real-time data in order to implement an ABC analysis strategy. It will take a lot of time to keep track of data and come up with numbers to determine how products are selling. You will not have to use this time for other business tasks. Manual inventory management is possible, but it will require a lot of time and effort.
How can Technology be used to Manage your Inventory?
While any type of effective inventory management is better than nothing, manual inventory tracking could be better. As we have seen, however, it is a good option. This takes a lot of time and effort, and it still needs to be improved. Modern technology is essential if you want to manage your inventory optimization better and make it easier.
There are many inventory management systems on the market, but for small businesses, the best choice is to integrate inventory management with their point of sale (POS) system. A modern POS system is a high-tech cash register. It keeps track of inventory and facilitates checkout. You don't need to keep track of inventory separately if your POS has inventory management tools.
Instead, the system subtracts one from your stock quantity every time a cashier rings up an item. It's as simple as that. There is no better or more reliable way to make restocking decisions than dedicated inventory management software for small businesses.
A POS system that integrates inventory management, such as the Arion ERP POS+, will instantly tell you if a product link is in stock, out of stock, or urgently requires to be ordered. These guidelines will ensure that you order the right amount of stock each time rather than ordering when you run out.
Software that tracks your sales can help you decide which products to keep and which ones to eliminate. While you may have a general idea of what products are doing well, you can rely on something other than this information when you have POS inventory software for your small business. The system will provide analytics that allows you to see how each unlimited product performs.
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The POS+ from Arion ERP allows you to Manage Inventory like a Pro
Your business' accurate inventory management is crucial. We've seen that using the right technology tools to manage inventory software takes less time, makes it easier to keep things in stock management, and gives you the information you need to make smart business decisions. This results in a small business that is able to supply chain management with the right products and keep customer satisfaction and customers happy. There's no reason for you to struggle with outdated systems like spreadsheets when there are so many technological options available. Although inventory management software is more expensive up front, consider the savings you'll make by eliminating waste, saving your time, and never missing an opportunity sale.
Software that seamlessly integrates with your POS system is the best way to manage inventory system control. Arion ERP's POS+ is an all-in-one system. Its basic features are high-quality hardware and advanced software. This allows you to streamline your checkout process and manage inventory costs behind the scenes. The POS+ will streamline other aspects of your company, such as your customer loyalty program. This will allow you to spend less time attempting manual processes and more loading time watching your business flourish. Contact our sales expert team/respected expert to receive a complimentary quote on how Arion ERP can make your business successful expert tips.
