|Small merchants want to be sure they have certain products in stock to meet consumer demand, but they also don't want to get stuck with an overloaded supply that no one is buying. Striking the right balance is key to maximizing an inventory.
To help small companies deal with this issue, a recent report from Entrepreneur highlighted five ways to deal with common inventory management issues.
1. Too much inventory
This commonly occurs as an issue with the supply chain. Attempting to avoid a shortage, the company orders more items from a supplier than it necessarily needs, which can lead to profit erosion, as well as eat into working capital, the report stated.
Solving this problem will require the company to project its sales of such items more accurately. Past sales figures is a good place to start.
2. Poor tracking capabilities
Companies need a warehouse management or supply chain management solution in place that will keep track of items in stock. Using electronic data interchange and barcode scanners can identify how much of an item is in stock, and also ensure that data entry is accurate, the report said.
3. Spreading resources thin
Companies run into problems when they try to devote equal time to various areas. It simply can't be done, the report stated, and, instead, inventory managers should practice the triage theory. Focusing on what matters most will ensure that problem areas are taken care of first.
4. Relying on spreadsheets
Some organizations are still operating in the dark ages of enterprise technology, the report said. Certain accounting software and business intelligence solutions will help a company better analyze and keep track of its inventory.
What's more, innovations like cloud computing have made such apps more accessible than ever before. Companies should take advantage.
5. No backup plan
According to Entrepreneur, a company can effectively track inventory, pay the right amount of attention to the right areas and utilize EDI solutions all it wants. But it will be all for naught should the business fall victim to a natural disaster, fire or flood. Always have a backup plan in mind, the report stated.
The latest Non-Manufacturing ISM Report On Business report from the U.S. Institute of Supply Management revealed that the sector grew for the 23rd straight month in October, according to industry news provider Procurement Leaders. Researchers credited the continued high performance to efforts aimed at keeping inventories in check.