Having an inventory management system in place can help your business stay ahead of the curve and the competition. If you don’t know what you’re carrying, it’s hard to say where you could be saving money.
Luckily, getting an inventory system up and running isn’t a massive challenge, and anyone can be ticking over smoothly by following these five, simple steps.
Get some inventory management software
The first thing you need is a system in place to manage all the data.
You need this before you can record anything in a meaningful way, before you determine what style of inventory control you’re going to use, and before you can start making any real progress in managing your inventory. Inventory management software gives you the structure you’ll need if you’re going to have anything better than a rough idea of what’s on-hand. Capterra has a full listing of options in our inventory management and inventory control software directories.
Before you make a purchase, figure out how complex you need your system to be – do you want barcodes, do you have multiple sites to manage, will you need inventory forecasting tool, etc. – and how much you can reasonably spend. More money doesn’t always mean a better product for your business.
If you want some more tips on getting an inventory management software for your business, check out the myriad posts we’ve got on the subject.
Set up your software for success
Now that you’ve got some software in place, you need to get ready to work. It’s best practices time.
You’ll need to make sure you have a way to print labels, a physical organizational system in place so that you don’t double count, and make sure that every single part of your inventory system is setup and ready to rock.
That last one is the real time suck. Which software you end up with will determine both how much setup you can control and what that control looks like. Things like how a unit is counted – pieces, by weight, length, etc. – which vendor it comes from, and the unit costs.
Once all your inventory is setup in the system, you can start to actually enter information into it.
Figure out what you have
If you want to drive to the NBA finals this year, you need to start out with two pieces of information. The first is knowledge of where you are. Building a baseline for existing inventory is the key to starting your inventory journey.
Every inventory count should be on point, but this initial count is going to be even more important. Every change in inventory form this point onward has to be built on a solid foundation, and if you forget to count all those boxes in the shed, you’re not going to have any idea where you really are in six months’ time.
Having this baseline in place makes everything else you do work. Don’t skimp on this step.
Set a target
The other thing you’ll need to get to the finals is knowledge of where it’s being held. Knowing where you are isn’t a whole lot of help if you have no idea where your destination is – Oakland, probably. I mean, right?
Now that you know where you stand, you can start to think about what kind of inventory you’d like to have. This is where you’ll be doing the real analysis of your business, looking at the rate of inventory consumption, the shelf life of your inventory, and the overall cost associated with carry it.
If you can find way to get excess inventory out of the equation, you’ll have the cash that would have been tied up in chicken wire, for instance, to spend on other business needs.
Setting a target inventory level is one of the most important parts of keeping inventory in the first place.
Refine your target
Once you’ve run your system for a while, you’ll be able to refine your target inventory levels to make things run even more smoothly. Over time, you’ll begin to account for seasonal changes in inventory demands and make better use of delivery timeframes. If a vendor can get you product in 24 hours, you might not need as much of it on hand.
Of course, many parts and items will require more stock on hand as your business grows. Management software can help you figure out when to start bulking up to keep you from ever running out.
If you don’t have a strong inventory management system in place, you’re probably wasting money. We tend to hoard things, as a species. That may have worked out well for us when times were lean, but for a business, it can lead to lost productivity and missed sales opportunities.