How can my small business optimize its inventory? What type of inventory management solutions are available for my small business? What type of automation should I implement in my warehousestockroom to optimize inventory?
If your small business holds inventory, whether it be in a stockroom or warehouse, it is important the right tracking methods and management solutions are in place. Optimizing your inventory enables your small business to increase profits and decrease costs on overheld/undersold items.
The ways you can track your inventory is through Key Performance Indicators (KPI/). Using various KPIs and metrics can help your small business measure the performance of your supply chain management systems and find ways to improve the entire process. These KPIs are:
- Inventory Turnover
- Inventory Accuracy
- Delivery/Shipment Time
- Cash-to-Cash Cycle Time
- Warranty Costs as a Percentage of Sales
Use a Management Solution with Real-Time Updates
A complete inventory solution that updates in real-tie will consist of management software, mobile computers, and label printers. This solution helps your business track inventory levels and movements in your warehousestockroom by item, serial number, or lot number.
The top six inventory management solutions you may want to consider are:
- Cin7
- SOS Inventory
- Ordoro
- Zoho Inventory
- Fishbowl
- Veeqo
- Boxstorm
- TradeGecko
- Unleashed
Track and Trace Your Inventory
Track and trace refer to the process of determining your stock's current and past locations. This information is important if there are ever recalls and supply chain and/or product issues. By investing in a track and trace system (ideally a software that can do so/), your small business is enabling your product's status to be captured through the value chain. This can also expose you to more information about your product and the news and/or announcements that relate to your inventory.
Regularly Reevaluate Your Supply Chain's Components
Reevaluating your supply chain regularly can help your small business obtain profits and reduce your expenses on items such as last-minute shipping charges and improper use of employee time.
It's important to keep your methodologies and approaches currently with best practice. Industries are ever-evolving and may require you to change the way you house your stock.
Implement a Third-Party Automation Solution
Supply chain automation is a systematizing part of all of a workflow to improve processes by utilizing technology to centrally manage complex workflows. Some automation systems you may consider are:
- Automated Storage and Retrieval System (ASRS/) are made of various computer-controlled systems that automatically place and retrieve loads from set storage locations in a facility with speed, precision, accuracy.
- Warehouse Management System (WMS/) is a software that allows your small business control and administers warehouse operations from the time goods or materials to enter your warehousestockroom until they move out.
Analyze Your Data and Forecast Inventory Movement
You may want to consider forecasting inventory movement. Why? This can help you prepare for highs and lows in sales for your small business. Several internal and external factors affect the sales of an organization: seasonality of inventory, competition, technological failures, reputation, labor issues, supply chain-related factors, inflation, recession, and change in-laws.
Forecasting your inventory can help you predict demand accurately, which can result in happy customers, reduced stockouts, safety stock reduction, efficient production cycles, idle stock reduction, better pricing and promotion strategy, better management of manpower, better supplier negotiations, and you will be able to start planning for future sales strategies.
Build Contingency Plans for Pipeline Inventory
Pipeline inventory shows you the area where a lot of your small business's money is lost. It is important to develop tight contingency plans that limit the fallout from slow-moving inventory, missed orders, manufacturing errors, late deliveries, etc.. Examples of contingency plans include having safety stock, defining ways to mitigate customer dissatisfaction, and having agreements with other couriers.
Get Rid of Inefficiencies in Your Warehouse
By tightening up your storage methods, you will find more ways to save space and money. Some of the top inefficiencies to look out for are:
- Not putting product away as it enters your warehousestockroom. When you remove this inefficiency, there is the visibility of your inventory and your customers can get their orders fulfilled promptly.
- Poor product placement and inefficient labeling. When you remove this inefficiency, workers will spend less wasted time running through the warehousestockroom collecting goods.
- Manually order checking. When this inefficiency is removed by investing in a Warehouse Management System (WMS/), orders are checked and double-checked before reaching the packer.
- Unclear pick path. When you remove this inefficiency and create a clean and clear pick path, you will be able to fill orders faster, as well as restock more efficiently.
- Manual sorting. When you remove this inefficiency, you have fewer mix-ups in which bin outgoing stock goes in, as well as leaving less room for human error. Implementing a barcode system can help track each item, from the second it enters your warehousestockroom, to where it's placed, to where it ultimately ends up (who buys it/).
Optimizing your inventory can ultimately save you a lot of time and money. Will see fewer errors when it comes to shipment, stock placement, and stock lifespan, as well as reduce the number of headaches that are caused from having to run around your warehousestockroom looking for product. Taking the time to implement a few efficiencies will go a long way!
Do You Want to Look at Your Financing Options?
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We have nine different business loan types to choose from. This means that we're uniquely qualified to help you find the perfect loan to open your small business.
Applying for a business loan doesn’t affect your credit. Better yet, your business loan may be approved as soon as the same day.
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