How To Manage Inventory For Small Business
Inventory management is certainly an important issue for every business, even if it is a small-scale business firm. Every business organization needs to apply the Inventory management system to execute diverse operations, such as, to manage the inflows and out-flows of products; to generate invoices & purchase orders, to produce receipts, to control and monitor the inventory-related accounting; etc.
In Bangladesh, most of the companies fail in managing inventory, and it affects overall company performance and reputation. This article focuses on some effective inventory management strategies for a small-scale business.
Purchasing an Efficient Inventory Management Software
The manually handled inventory management system often fails to meet up the changing needs of the business. Moreover, manual system can run the risk of making errors, taking long periods to perform the analysis of inventory movement, calculating demands and exact figures, etc.
However, a small firm can manage its inventory by a customized inventory management software. Company can purchase an up-to-date and efficient inventory management software like Tally.ERP 9.
An efficient inventory management software can enable the company staffs to work faster than ever generating all the business reports and requirements.
Further Reading: Ways of cost cutting for your business in Bangladesh
Integration of Vendors into the Inventory System
Distribution of works not only reduces the bulk of tasks, but also enhances the quality of tasks. A small firm can engage their vendors or suppliers in their inventory system, which might be termed as a supplier / vendor-managed inventory. It is certainly a useful technique to manage the inventory in a smarter way. In this process, the suppliers/vendors get access to the inventory of the distributor-company. The suppliers/vendors generate respective purchase orders assuming the needs of the distributor company.
The small-scale companies, who run distribution-intensive business, can operate vendor /supplier managed inventory to minimize the data-entry errors and to manage the records of purchasing orders more effectively.
You need to get small Business ERP Solution, or online ERP Solutions to get started with this feature.
Hiring Experienced Personnel and Consultants
Quality Experience has no alternative, whether in inventory management or other business procedures. It is certainly a successful way to hire high-qualified personnel, who have rich experience in the inventory management sector. Inventory specialists can efficiently handle inventory adjustments, inventory reporting, inventory classification (categorizing the stocked items), etc.
Moreover, the inventory control personnel can perform inventory management at the stock level by reviewing stock levels and the actual flow of merchandise through individual calculation and inventory; reviewing the product-based costs & overall costs; supervising the inflow and outflow merchandise; etc.
All these tasks help a small business to manage its inventory more efficiently. Adding to these, a small business can hire inventory consultants on a part-time basis. These consultants can generate and manage the internal inventory systems; maintain accuracy; perform cycle counting; monitor the inventory of product-shipping & receiving; manage inventory about order-picking operations; etc.
Generation of Lead Time Reports
The concept of Lead time refers to a period of time required for reordering an inventory. Generally, the suppliers or vendors submit products bit by bit after placing an order.
Therefore, to manage the inventory in an efficient way, a business can generate lead time reports that can enable the company-staffs to understand the probable time required for replenishing the inventory.
Generation of Inventory Tracking System
A small business can build up an inventory tracking system. This will certainly enable the company-staffs to manage the inventory as well as monitoring the turnaround times.
The formats of an Inventory tracking system might range from traditional spreadsheets to modern computerized programs. Thus, a tracking system can execute inventory control by facilitating the company-staffs in organizing the item levels and recording cycle counts at different distribution centers.
Regular Monitoring the Inventory Level
If any business bear bulks of inventory, then it will not only engage huge amount of time to handle those inventories, but also enhance the expenditure of the company, as more staffs will be required to handle the inventory.
Therefore, regular monitoring and maintenance of inventory can justify the actual demands of data that are needed to be stored in the inventory, and minimize the amount of seasonal inventory and exclude the unnecessary inventory; etc. All this steps will lead towards more systemic inventory management.
Keeping Records of Inventory Turnovers
To manage the inventory in an efficient way, a company can keep records of its inventory turnover along with a turnaround of the product delivery period. In other words, this strategy attempts to measure the frequency of the companies sells inventory. It also measures the time-interval of product delivery to the customers.
Keeping Records of Inventory Product Turnarounds
Whether a company is small or big, it often becomes successful to sell a portion of its productions, while leaving the rest portion stored in the stock rooms. Therefore, the company can develop a system for identifying the products that have faced higher sales quickly as well as the products that have faced lower conversion rates. This strategy will assist the company to deal with the inventory of the high demanded products more efficiently.
Tracking the Work-in-Progress
A businesses can perform the inventory management in an efficient way by well-designed tracking units. The inventory is required and applied diverse operational stages.
A business can utilize the inventory for diverse purposes depending on the business needs. For instance, a business company can employ a customized system for tracking the “work-in-progress” materials. It creates a scope to the company to adjust diverse order amounts in the inventory.