This post brought to you by Fishbowl
Inventory management is vitally important for any business with a constant flow of incoming and outgoing stock. Inventory management affects every part of your business, from expenditure to customer service, so making sure that your numbers are correct is vital to everything operating at peak efficiency.
To be specific, though, what is it about inventory management that is so important? Here are just three prime examples:
1. Revenue and profit
If you have a business, then you likely have a product you want to sell. Your inventory is the primary factor driving your capacity for revenue and profit generation. This makes a great argument for automated inventory management using software like the type Fishbowl provide because it gives you at-a-glance information on every part of your system, including revenue and profit. Now you can see exactly what you’re spending on stock, what you’re selling it for AND what you’re making all at once, allowing you to adjust your expenditures accordingly.
Once you’ve used your highly optimised inventory to go to your suppliers and hammer out better deals on stock in order to better maximise your profits, you will need to be able to manage the influx of new stock accordingly, especially if you’re buying in bulk.
Ordering too much means devoting more employee time to organising it all and arranging appropriate storage space. If you deal in perishables, that can mean you run the risk of having stock rot or expire. You don’t want too little stock either, however, because that may mean you run out of an item. That could lead to an irate customer base, which puts pressure on your customer service team to keep consumers happy and coming back to see you.
You’ll also be able to better track your inventory turnover, allowing you to see what’s selling, what isn’t, better anticipate order quantities and be more selective in which stock you bring in and which you do not.
Not only does this allow you to fine tune your product catalogue for maximum customer penetration but it also keeps your shelves open to capitalise on new products that might be trending among consumers. Products that do not display rigorous turnover can be discarded from the inventory system once they’ve sold through, creating more space for newer and potentially more viable items.
Poor turnover also forces clearance sales and run-outs, meaning you won’t make back as much on the product. All of these statistics can be monitored or even averted through scrupulous management of your inventory.
These are just three ways that inventory management will dictate not only your ability to run your business in an efficient and responsible way, but also the level and quality of customer service you can provide. Like so many other facets of running a business, it isn’t the most fun or glamorous part of the job but it is a job worth doing right.
What are your top tips for flawless inventory management? Help your fellow entrepreneurs out in the comments below!
Images courtesy of Stuart Miles and stockimages at FreeDigitalPhotos.net