As an entrepreneur, inventory management is something that is dreaded and usually handed over to a managerial position. Managing an inventory requires dedication, good time management skills, and from an entrepreneur’s perspective, the right hiring skills. There are a huge amount of things you can do in order to get rid of excess inventory or keep customers happy while they’re waiting for inventory to be restocked. Here are five tips that you can use to successfully manage a large inventory.
Avoid the Problem of Too Much Inventory
As a beginning entrepreneur or inventory manager, it can be quite easy to spend an unnecessary amount on too much inventory, which erodes profit over time. Inventory that isn’t used can sit in a warehouse for months and is subject to a variety of different problems like damage and depreciation of value over time. The first step to making sure you’re aware of every part of your inventory is to invest in inventory software. This allows you to gauge all of the aspects of your inventory, from what is being sold, where your specific pieces of inventory are, and what inventory is not being used at all.
One way to use software for inventory is to make projections based on the information given by how much supply you will actually need and when you need it. In order to properly gauge this, you’re going to have to look to the past to get an accurate idea of what is selling and when.
After you find out what inventory you need, you also need to be aware of how much you actually have in stock. Poor inventory tracking can lead to dangerous mistakes and false promises to customers. Make sure first that you have the proper sending, receiving, and order fulfillment documents being processed. Using electronic data interchange (EDI) and scanning bar codes can make tracking inventory much easier and more efficient. In order to make sure everything is correct, take count of a few random items that are in stock and compare the record to its actual count. This can directly translate to a near perfect inventory record over time. It’s important to also count high selling items more often than less used items within an inventory.
Prioritize Your Inventory
As an inventory manager or small business owner, it can take a large amount of time to keep track of every aspect of the company. It’s important to prioritize your time and to spend it gathering details and analyzing things that matter. Focus on the information from items that generate the most revenue for your business. A common rule of thumb for many smaller businesses is that 80% of the total demand for your company will be generated by only around 20% of the actual inventory that you possess. It’s important to manage and analyze these pieces of inventory the most. After prioritizing these items, you can then spend time managing the lesser valuable parts of your inventory.
Don’t Forget Spreadsheets
You no longer have to hand-write everything into a paper spreadsheet. Most software for inventory capitalizes on the use of various spreadsheets, which can give you an idea of the big picture of your inventory. Computerized automatic maintenance allows you to free up your time to work on actually managing the inventory itself rather than writing everything down by hand. It’s also easier to fix when you make an error.
Always Have a Backup Plan
Finally, as either an inventory manager or an entrepreneur, always prepare for the worst-case scenario. Things happen despite your best hopes, from natural disasters like floods and fires to simple theft. Save critical data on a hard drive in an offsite, secure location and update it on a monthly or even weekly basis. Having a backup plan can prove to be essential and can be potentially business saving if a problem does occur.