Inventory Management: 5 Common Mistakes And How to Avoid Them
Today’s connection post is brought to you by Marcus Lansky. Marcus owns a graphic design business, and he also is the founder of Abilitator, a small business dedicated to helping people with disabilities start their own businesses. Marcus was born with a spinal condition and was told he could never walk. He proved the doctors wrong, and he never looked back as he forged ahead with the confidence of fulfilling his dreams. You can contact him at marcus.lansky@abilitator.biz
As a small business owner, you have many jobs. While it’s exciting to run your own company, it can also get stressful. Forbes reports that small business owners have many unique concerns, including restrictive government regulations, tax compliance complexity, inventory management, and uncertain economic times.
Inventory issues are a common worry. Walking the fine line of stocking enough inventory without overstocking and wasting money can be tricky. This guide lays out some of the common inventory management mishaps that small businesses face and explains how to avoid them.
Sending the Wrong Item to a Customer
The best way to avoid this issue is to have a well-organized warehouse and clear-cut digitized processes. For example, consider using electronic barcodes to scan items and match them up with the appropriate order to help avoid human errors when it comes to packaging goods. This also allows you to easily track inventory.
Still, accidents can happen. Decide how to handle this situation before it occurs so you can ensure a fast response. Does the customer have to return what they received? Will you send them what they ordered for free? When you already have your processes defined, you can act quickly. A fast response time is important because slow service is a major cause of customer satisfaction and can lose you an otherwise loyal customer for good.
Hanging on to Obsolete Inventory
Leasing a warehouse isn’t cheap. Although you may be able to write off some storage costs when tax season rolls around (see what the IRS has to say about it!), you don’t want to hang on to obsolete inventory that isn’t selling. This is a drain on finances, space, and earnings. Additionally, this unused inventory takes up room that could otherwise go towards profitable goods that are selling.
Accurately tracking sales data and inventory allows you to ensure you aren’t storing inventory that is obsolete, or worse, could spoil (in the case of food). Tracking sales data also allows you to run your company more successfully overall because you can see what products are doing well and bump up inventory accordingly.
Poor Warehouse Management
Poor warehouse management can result in snafus like sending the wrong item to the wrong customer, lost inventory, and more. Optimal warehouse management requires well-defined organization and processes. You need to define people’s roles within the warehouse and outline processes to monitor who does what. You also want to detail day-to-day operations. Having a management map that corresponds with a warehouse map can streamline things.
All of this should be written down and monitored for efficiency. This ensures that your management system can withstand changes. For example, if one employee leaves, the entire system won’t crumble. Warehouse management best practices don’t end here as well, so make sure to implement measures like improving efficiency by eliminating paper and using wireless devices to enhance communications, to name a few.
Insufficient Data Entry Processes
Data management is the key to business success as it puts important information at your fingertips, helps to support business compliance, and saves costs and time. All of the issues described above can be prevented with comprehensive data entry and management. For example, with good data storage, you can break down inventory into categories (safety stock, replenishment stock, normal stock) to ensure adequate levels. You can then make cost-effective inventory decisions.
It will also be easier to identify patterns over the long term—for example, why excess stock occurs. Finally, you can use data management systems to combine inventory and sales data. This lets you use statistical formulas to integrate sales forecasts with stock levels. Use mobile devices to facilitate data entry and give you real-time data warehousing information, straight from the warehouse floor to the desk.
Choosing an Unreliable Transporter/Shipper
Once inventory leaves your warehouse, you want to be confident it will safely reach its intended final destination. When choosing a logistics provider, first consider their capabilities. For example, are you shipping sensitive goods like frozen foods, and if so, can they handle it accordingly? Second, check out their customer service as well as their safety record, company stability, and overall reputation. You can also see if they serve industries with products similar to yours.
A Final Word on the Importance of Inventory Management
You’ve probably read plenty of scary stats about entrepreneurship. One of the most common claims is that the majority of small businesses fail in the first ten years. Often, such failure is simply due to the entrepreneur failing to take control of their business. Don’t fall into this trap. You should have an eye on every aspect of operations, from marketing to inventory management. With this guide, you’re ready to seize control of your inventory.
Visit myMarketing Cafe today for more ways to grow your business.
Photo Credit: Unsplash.com
