Inventory Holding Costs: Definition, Costs an
Business inventory costs have increased by 2.4% over th...
EFFICIENTLY MANAGING YOUR BUSINESS INVENTORY
Bookkeeping or inventory management is one of the managerial duties that an entrepreneur should carry out to ensure that his/her business is moving on the right track. Bookkeeping or inventory management is a dangerously vital part of running a successful business. A business that does not keep records of their inventory is not well managed, and like it or not, is likely to fail.
One of the tools used to carry out the bookkeeping processes is an inventory management system. This is an automated service that carries out bookkeeping activities in a more organized way, making it easier and faster for your business.
A manual inventory management system can be very frustrating, and even with the stress it brings, there is the tendency of unintentionally omitting a few things. Moreover, even errors are very much likely to be higher than when you use a digital inventory management system. And to sum it up, there’s also the possibility of losing or misplacing important records.
All these things can be avoided by investing in an automated inventory management system. The only catch is that it’s important to know what system is best suitable for your business industry. For example, Shopify is best for e-commerce websites and businesses.
Benefits Of An Automated Inventory Management System
An inventory is made up of the goods or products that you buy, but don’t sell immediately. You purchase these goods to keep in your store for when customers will need them. Having a proper inventory management system can benefit you and your business in a lot of ways – From saving you a lot of money to making sure that you always have products for your customers to buy.
Most businesses have adopted the automated inventory management system because of the immense benefits that it has to offer while some people still use the manual method of bookkeeping and inventory management.
Well, if you’re considering using an automated inventory management system, you’re in luck! Because, here are the benefits you stand to gain:
1. It helps you manage your business more efficiently
Inventory can be very expensive! They take up a lot of storage space and they rack up a lot of insurance fees, so, you don’t want to have a lot of them lying around for a long time. For perishable goods, they can get spoiled easily, leaving you with all the losses to bear.
However, having an effective automated inventory management system we will help you:
2. It helps you make profitable business decisions
When you have all the necessary information about your business, you can make profitable decisions for your business. For example, it can help you make decisions that relate to seasonal purchases. With the information that is stored on your inventory management system, you can predict what products will sell in a particular season because you already have information about it.
3. Centralized Inventory Management System
With a digital inventory management system, you can unify the inventories of your numerous online marketplaces. It allows you to monitor what stock you have available in both physical and online stores – all in real time.
You can manage all branches of your business from one location as long as you link all of them to one inventory management system platform. This saves you the time and energy you would have otherwise spent trying to balance the stocks of the branches of your business.
Now that you know the benefits of a digital inventory management system, we’ll show you how to use it to scale your business.
How To Use an Effective Inventory Management System to Scale Your Business
With all the information provided by your digital inventory management system, there is a lot that you can do to scale your business. Information is power, but when it is not applied appropriately, it becomes useless.
A digital inventory management system already makes it easier for you to plan and manage your business. But here are some good inventory management skills that you can apply with the information you get from an inventory management system.
1. Make use of the FIFO principle
The FIFO principle simply means “First in, First out”. What this means is that you should always practice selling older items first before the newer ones. For example, as a grocery store owner, if you get a new supply of juice on Thursday and you are expecting another supply on Tuesday, you have to finish selling off Thursday’s supply before stocking Tuesday’s supply.
This practice ensures that you are not left with stale goods that can expire and leave you with losses. The FIFO principle is mostly beneficial to stores that sell perishable products.
2. Prioritize your inventory
Always monitor your inventory closely. When you monitor your inventory, you are immediately alerted when you need to restock some goods. You don’t want to wait till you’re completely out of stock. Customers don’t like it when they come to buy a product and they are told that it is not available; this can lead to loss of sales.
Some store owners prefer to run spot checks, especially on their most expensive and fast selling products. They can do this daily, weekly, monthly, or yearly, depending on what their schedule permits. This would allow them to properly audit their inventory and monitor the sales of products.
3. Order restocks by yourself
Another great practice that helps scale your business over time is ordering restocks yourself. . This way you are not buying more than you need and you are not buying less than you need. In essence, this will help you control the flow of money.
As the owner of the business, you should be accountable for what comes and goes out of your store, especially the finances.
If you’ve read till this point, then congratulations! You now know what an effective inventory management system looks like, how it can benefit your business, and how to use it to scale your business.
Hope you start making great business moves from now on.