Small businesses are known for their ability to create meaningful relationships with their customers. A great customer experience depends on several factors, including your inventory management system.
But, as your business grows, is your inventory management system prepared?
Preparing your business for more customers while maintaining that small business feel can be challenging.
Keep reading to learn:
- What small business inventory management is
- How to find the right inventory management system for you
Defining Inventory Management
Inventory management involves tracking your production and sales to make sure your inventory always contains the products your customers want.
As a small business, you can use your inventory sheet and sales records to predict your customer needs and meet their demands.
Why Inventory Management Is Important
Inventory management helps small businesses increase profits and create customer satisfaction by making sure consumers have the right products at the right time.
Inventory management can help small businesses reduce costs, increase sales, and predict fluctuations in customer demand.
Let’s look at the ways inventory management affects your small business:
- Customer experience. Websites that don’t update to reflect when items are sold out results in a frustrating customer experience. An effective inventory management system will provide your customers with accurate product data and help you keep popular products in stock.
- Predicting supply and demand. Your inventory and sales data can help you identify your customer behavior trends. You’ll be prepared for seasonal increases in demand, and you can also find and discontinue unsuccessful products.
- Cost reduction. Small business inventory management can help you keep the right amount of product, so you’re not spending money on excess supply.
- Seamless financial tracking. With real-time inventory data, you can streamline your cash flow reporting and easily manage production, storage, and shipment costs.
In the short term, your inventory management system makes sure you don’t run out of popular items or spend too much money storing excess supply.
But, in the long term, data from your inventory management system can help you anticipate fluctuations in customer demand. When you understand patterns in customer demand, you can better prepare your production schedules.
Ultimately, a sound inventory management system creates a streamlined process that empowers you to manage your supply, respond to changes in demand, and improve your bottom line.
Small Business Inventory Management
When it comes to small business inventory management, it’s essential to find a system that works for your business.
Types of Inventory Management Systems
The three main types of inventory systems are manual, periodic, and perpetual.
Manual Inventory Systems require an employee to go through the inventory, count items, and maintain a tracking sheet. While most businesses no longer use manual inventory systems, it might still be appropriate for small businesses that don’t carry a lot of stock.
Periodic Inventory Systems count and track inventory at the end of an accounting period. Tracking can be done manually or with the help of tools such as barcodes.
Periodic inventory systems are easy to implement because they consist of fewer records and simple calculations. Small businesses often find that using a periodic inventory management system is the right fit for them.
Perpetual Inventory Systems is the most sophisticated system, and it uses enterprise systems to provide real-time inventory data.
Unlike the periodic system, there’s no need for scheduled inventory counts. Instead, a computerized system is constantly tracking production and sales.
The perpetual inventory system offers the most detailed supply chain data. However, for small businesses, the cost of real-time inventory management is not always worth the benefit.
Finding the Right Inventory Management System
Before choosing an inventory management system, you should know what your business needs.
Consider the following when choosing a system:.
- Your budget
- Your inventory management goals
- Problems you want your inventory management system to solve
- How it integrates with your current software
- Who needs access to inventory management
- How you track inventory
You’ll often find that your budget helps you narrow down the options for your inventory management system.
However, it’s also important to know what you want to get out of your inventory management.
If you’re not concerned with real-time data or detailed reports, then you might not need a perpetual inventory management system.
Inventory Management Software for Small Businesses
Traditionally, businesses maintained paper records of inventory and sales data. Now those records have moved to computerized and even online spreadsheets.
It’s possible to create your small business inventory management system using spreadsheets. However, choosing a dedicated software to handle your inventory management system has several benefits.
With inventory management software, you can:
- Automate repetitive manual tasks
- Increase operational efficiency
- Integrate your business operations
- Provide accurate inventory reporting
- Improve the supply of goods
- Reduce the risk of theft and inventory shrinkage
Here are three of the best inventory management systems for small businesses:
Sellbrite enables businesses to connect and sell on the top online marketplaces, including Amazon, eBay, Etsy, and Google.
Key features of Sellbrite:
- One-click integrations with top online marketplaces
- List items online
- Multi-channel management
- Sync inventory
- Ship orders
Best inventory management software for: Multi-channel sales management
Price: Try free for 30 days + plans starting at $49/month
Zoho Inventory helps businesses manage online and offline orders with end-to-end item tracking and warehouse management. Its inventory management software seamlessly integrates with Zoho CRM and Zoho Books.
Key Features of Zoho Inventory:
- Order management and fulfillment
- Multichannel sales
- Serial and batch tracking
- Vendor relations management
Best inventory management system for: Small businesses looking to grow, or current Zoho users
Price: Plans starting at $49user/month
Ecomdash helps online businesses sync inventory data across multiple channels. It provides real-time data, unlimited channels, and a consolidated order dashboard.
Key features of ecomdash:
- Inventory management
- Dropship automation
- FBA management
- Multichannel listing
- E-commerce API
Best inventory management system for: E-commerce or dropshipping businesses
Price: Plans starting at $60/month
Inventory Management 101: Tips for Small Business Owners
There are several best practices to get the most out of your small business inventory management.
Focus on Forecasting
Forecasting is an essential function of running a small business, and your inventory management system will help you perform it.
If you want to optimize your customer experience, you need to be proactive.
When several customers have tried to purchase a product that’s sold out, it’s already too late.
Learning to fine-tune your sales forecasts will prepare you for seasonal demand and help you avoid stockouts and backorders.
In addition to your sales data, you should use market trends, economic shifts, and customer research to create accurate forecasts.
Perform Stock Audits
While software can help automate your inventory management system, it can’t help you if it’s not accurate.
Take time to schedule regular audits and ensure that your software reports are a genuine reflection of your supply.
For more benefit, you can use your audit times to analyze your product lines. Keep an eye out for low-turn stock. It might be a sign that you need to discontinue an item or run a promotion to move idle supply.
Empower Your People
Your inventory management system integrates with production, sales, and customer success. So, your employees must know how you track inventory and plan to use data to drive decisions.
In some cases, you might find that you need to hire an inventory controller. An inventory controller manages the computerized inventory database and serves as your internal point-of-contact for employees and vendors.
When you have one person dedicated to inventory management, you can get the most out of your data or software.
Re-Evaluate Your Inventory Needs
As your business grows and evolves, so will your inventory management needs. It’s crucial to regularly evaluate any business process.
If you’re expanding into new channels or a new customer base, you might find that your inventory management needs are growing too.
Take a look at your records and talk to your employees to see if new features or capabilities can help you keep your customers happy while you’re expanding.
Managing a small business involves keeping track of a lot of moving pieces. Finding the right tools can be the difference between healthy profits and poor reviews.
With the right inventory management system, you can ensure that your customers have an excellent experience while also reducing costs and increasing sales. If you choose software, make sure it integrates with your other systems and online store.
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