Your warehouse is constantly changing. Throughout the day, sales, returns, new receipts – even damage and theft – affect stock levels. While daunting, effective inventory management and control is one of the most important functions of a successful retail or wholesale inventory software for small business.
Effective inventory management becomes more difficult as your business expands and the amount of inventory you handle increases. By leveraging technology, you can make things easier for yourself and your employees. That’s why an inventory management system is an invaluable tool for retailers.
This guide tells you everything you need to know about inventory management systems. We’ll tell you which types of system to choose and which one could be best for you. We also describe the key features that systems should have to improve efficiency and overall customer satisfaction.
Before we get there, however, it’s worth spending some time on the basics. Let’s find out what exactly inventory management is and what benefits you get from managing it effectively.
What is inventory management inventory software for small business?
If you’re starting out in retail or wholesale, you might be asking yourself: “What is inventory management?” or “What is inventory management?”
Effective inventory management and inventory control are one and the same – and their definition is fairly easy to understand.
Inventory management is the process of tracking the amount of product on the shelf, in the store, or with other retailers and distributors. This is how you manage to get the right number of units to the right place, at the right time and at the right price.
By tracking and managing physical inventory effectively, you know how much of each product you have, when you might run out, and whether you need to replenish the product to keep it selling.
As a busy business owner, you should be able to do all this at a glance. That way you can make good buying decisions quickly and easily. Even at this stage, the right inventory management system is important, as we will learn later.
11 Benefits of effective inventory management inventory software for small business
Keeping track of your inventory is essential to the success of your retail business. After all, your job is to provide products that meet consumer demand. You can’t do that without effective inventory management.
Listed below are eleven of the biggest benefits of effective inventory management. They all explain the importance of accurate, real-time monitoring of inventory levels, and can be easily achieved by using dedicated inventory management software.
1. Fewer lost sales
When you don’t keep an accurate stock report, it’s easy to run out of products and miss out on sales. Instead of relying on memory or a trip to the warehouse to decide what to reorder, you can use an up-to-date stock report:
– compare stock levels with what is selling well
– Re-order from wholesalers before they run out
Depending on the stock program you use, you can also set a minimum stock level for each product. You will then see a list of products below that level and can quickly place and send new purchase orders.
2. Better invested cash
To succeed in retail, invest your money wisely and buy the right amount of each product inventory software for small business– enough to sustain sales and avoid out-of-stocks, but not so much that some items just sit on the shelf and drive up costs.
It helps to keep accurate stock records. You can quickly identify slow-moving products so you can tag and clear them, freeing up money to invest in new products, marketing and more.
3. More accurate reports
Accurate product reports provide accurate inventory cost figures, which are critical to the accuracy of more financial reports if you use cost of sales accounting.
This method assigns each sale a cost that comes directly from the value of the product assets.
Accurate cost values are therefore critical to the balance sheet, cost of sales statement, and income statement, on which many management decisions depend.
4. Early detection of the problem
If you keep a close eye on inventory levels, you’ll spot problems right away – instead of only finding them months later at the annual review, when discrepancies can cost you a lot of money.
Maybe you missed a step in the inventory process? Maybe there’s an error in your change order point formula? You need to know now!
The best way? By constantly comparing sales and purchases through a rigorously maintained inventory management system.
5. More satisfied customers
Accurate inventory reports also help you provide better customer service. When a customer says they haven’t received a product they ordered within a given timeframe, it’s not enough to contact supply chain management. If a product is lost, you need to be able to check the report and confirm that you have a replacement product in stock. Similarly, you can detect incorrect shipments more quickly if you regularly monitor stock levels.
And if your inventory system is updated with orders, you can sell customers the products they want because you know new items are on the way. This kind of communication promotes trust with your customers, which is a valuable asset in today’s competitive age.
6. Easy reordering
Reordering will be much more efficient if reports tell you what products are available. If you’re working with the right amount of stock and a threshold has been reached, you can use automation to trigger a new order to replenish the goods and keep sales moving.
This means you can methodically go through your inventory and make informed purchasing decisions, rather than physically checking individual SKUs on the shelves and issuing purchase orders.
If your reports come from advanced inventory management software Billing Software for Small Businesses, you can also see if you have already ordered products from a supplier and if your supplier has long lead times or irregular deliveries of finished goods. This information is essential if you want to keep track of reorders.
7. Reducing theft and loss
Products can be lost in many ways, from theft to loss to damage. However, if you manage accurate inventory levels, you can detect problems quickly.
And while no one wants to think that their employees might be stealing from them, it pays to be vigilant. Showing employees that you maintain accurate inventory levels is a great way to discourage theft.