Signs You Need an Inventory Management System

You have noticed that some stock is missing.

Items in your store are all over the place from the last time you were looking for a last remaining item for a customer.

You are losing a lot of money from the excess products that are now expired.

Do any of these describe you?

No worries. This article will help you learn modern ways of managing your stock as a small business owner, so that your enterprise stays on track to succeed.

Thing to Consider When Stocking

To begin with, buying and selling stock is how your small business earns profit.

However, overstocking can reduce your liquidity or cash availability and thus seriously limit your ability to transact.

On the other hand, understocking significantly limits your ability to meet customer demand.

The Right Way to Stock for Your Business

The right balance of stock levels requires sophisticated strategies that are still simple and sustainable such as:

1. Sales forecasting based on past sales numbers

Small business owners can predict how much stock they are likely to sell at any given point in time and thus remain within the right range. This will also allow fixed re-ordering whereby an enterprise makes orders for new stock at fixed quantities and fixed intervals of time. This way, wastage and shortage are equally avoided.

Sales forecasting however requires regular stock and sales reviews so as to establish which pattern the business follows. In the process of reviewing stock, businesses can also identify slow-moving goods so as to boost their sales through promotions, and possibly reduce future reorder quantities.

Entrepreneurs can take advantage of sales forecasting software that automatically makes projections based on entered past sales data.

2. FIFO (First In, First Out) method for effective inventory management

This is whereby items are sold in the chronological order in which they were purchased or produced. This will help to avoid expiration of perishable goods before sale, as well as avoid the obsolescence of seasonal goods such as fashion items before sale.

Small business owners can organize their store rooms or shop isles in such a way that older items are at the front, while newer items are at the back for easier compliance.

As already stated, the process of inventory management is intricately linked to the process of money making.

Most businesses mainly use Point of Sale (POS) systems to facilitate electronic transactions.

Modern POS systems also provide smart management solutions to enterprises.

These include:

• Sales monitoring through generated sales reports

• Smart inventory management through real-time updating of stock statistics based on each wireless sale.

You can read this blog article for more information on why every small business needs a POS system.

Other Recommendations

Small businesses can incorporate other modern ways of managing stock, such as:

• Drop shipping through e-commerce, whereby a seller runs an online store and distributes items from wholesalers or manufacturers directly to consumers, without having to hold on to the stock.
• Stock floater insurance policies which cover stocks against most risks while in transit, such as fire, theft and accidental damage.