Common Inventory Management Mistakes That Could Cost Your Company
Although inventory management is an essential task for any small business owner, it can be very complicated and prone to error..
Poor inventory management systems can leave business owners facing all kinds of costly problems, from inaccurate data entry to under-stocking and over-ordering. Fortunately, there are steps you can take to solve nearly any small business inventory mishap and prevent these mistakes from occurring again.
Lacking a Cloud-Based Inventory Management Platform
Your inventory is constantly changing, so you and your employees need access to accurate inventory data to make informed ordering decisions. This is where a cloud-based inventory management system will save your company a lot of time and money.
By storing your inventory in the cloud, anyone at your company can access up-to-date information when needed. This kind of system can also easily scale with your business, unlike manual spreadsheets that become increasingly difficult to maintain as your business grows.
Not only does a cloud-based system mean you can integrate point-of-sale from various venues with existing warehouse inventory, but it also means your company’s data is more secure. As Health IT Security explains, cybercriminals are hacking systems laterally these days, targeting weak links within your supply chain. Moving to the cloud means better protection for your customers’, suppliers’, and the company’s data.
Human Error
Human error is a common problem when it comes to inventory management. According to Business 2 Community, administrative errors—like incorrectly checking incoming stock—account for 15.3% of inventory loss!
In order to improve the efficiency of your warehouse and reduce human error, you can hire an experienced warehouse manager with deep knowledge of warehouse procedures and equipment. An expert warehouse manager should also be familiar with the latest and upcoming technology so your business can improve ROI and plan for the future.
One such technology is automated inventory tracking which can help you avoid problems with human error while eliminating wasted time. Using barcodes to track inventory automatically is one of the best ways to avoid common data entry problems. With a barcode system, you or your employees can update inventory data quickly while minimizing the risk of typographical errors and honest mistakes.
This is not only an effective solution, it’s low-cost. To implement a barcode system, you will need to invest in barcode printers and scanners. From there, you need an efficient and carefully coordinated system that helps you monitor stock levels in a profitable manner.
Overstocking and Understocking
Overstocking and understocking are common inventory problems faced by businesses of all sizes. Both of these issues can be costly for your business. For starters, if your business fails to order enough inventory, you may face delays fulfilling orders and risk disappointing your customers. Understocking can also cause you to overpay for last-minute inventory purchases and faster shipping to get the products you need as quickly as possible. You may even have to list certain products as out-of-stock and miss out on business.
Many companies see overstocking as an effective way to prevent the problems associated with understocking. However, this approach comes with its own set of problems. Ordering too much can cause serious cash flow problems, leaving less money for investing in valuable projects while stock sits on your warehouse shelves. Along those same lines, excess stock can lead to storage issues and problems with product expiration or deterioration.
If your business has obsolete inventory that isn’t selling, take steps to get rid of it so it’s not taking up storage space. One way to deal with obsolete inventory is to donate it to charities for tax deductions. You could also sell it at a discount or bundle it with related products that are selling well.
Investing in good automated software as early as possible will help you avoid problems with over and understocking. Look for systems that alert you when supplies are too low or too high. Some systems will even trigger automatic reordering of inventory, so you don’t have to keep an eye on this yourself. Automatic inventory management systems will also help you review which products are selling the best and which are not, so you can adjust your ordering patterns accordingly.
Inventory management issues can cost your company dearly. Make sure you know how to overcome these mishaps and prevent them from recurring, so you can minimize wasted time and common errors with inefficient stock levels. With a good system in place, your company will be set up to embrace success.
If you enjoyed this Mod, you might like to read more about these 10 cost cutting ideas & money saving tips for your business! Please share this Mod using the social links below. Any questions or comments? Let us know on Twitter!
Marcus Lansky
Marcus Lansky is a guest author for Millennial Moderator
