Indicators of a management disaster – poor inventory performance
Inventory comprises of stock goods ranging from raw materials to finished products and plays an important role in achieving daily business targets. One of the greatest challenges faced by small firms is maintaining optimal levels of inventory. Given the fluctuating nature of consumer demand, quantity can be quite difficult to maintain. A small business inventory software can help regulate stock levels and solve inventory problems.
In order to minimize risks associated with a management disaster, it is important to identify key inventory-centric problems faced by small companies.
- Frequent stock outages: Several firms face a shortage of fast-selling goods. This stems from poor procurement management. Lack of adequate planning leads to overstocking the wrong materials- ultimately tying up resources.
- Lack of visibility: Even in small firms, supply chains can get very complex if not monitored in the correct manner. Failure to effectively foresee operations can result in low ROI and stunted growth in the future.
- Failure to track existing stock: There might be bundles of a certain product stored away in your warehouse, but they don’t show up in your records. This indicates that you lack a robust system of tracking in-stock inventory items.
The best way to overcome these hurdles is to devise a streamlined inventory management program for your organization. Contingent upon your business needs, you can choose from an on-premise or a cloud software program. Majority of the firms opt for an automated program owing to its functionality and features.
What is small business inventory software?
An inventory management software comprises of multi-feature applications used to track and prioritize stock purchase, use, and disposal. It lets you automate business operations to improve efficiency and productivity. The primary focus is to reduce obsolete practices and upgrade performance by lowering losses. A customized program can be designed to specially cater to various business needs. Hosted in the cloud, it lets you centralize information for easier use.
How does an inventory software help?
Cloud-based software systems have a prominently positive influence on overall work execution. Here are some benefits of inventory software for your business:
- Access for all users everywhere: Having the ability to instantly update your inventory records across locations gives you a chance to boost collaboration. For companies situated in various cities, this comes in handy as it doesn’t let you miss out on valuable data.
- Automatic backups: If your business runs on hard drives or laptop backups, you aren’t doing it right. In case your storage device crashes, you will lose all of your crucial inventory data. To avoid such mishaps, backing up your data to the cloud will keep you covered.
- Ability to scale up as needed: When you plan on expanding your business, one of the pain points will be software that cannot support sizable data. You will have to shift all your data to another system customized for large businesses. This is both costly and time-consuming. A small business inventory software enables you to easily scale up your data and functions whenever expansion’s around the corner.
- Integrate with other software: As a small business working on multiple objectives, you need more than one software to optimize your functions. Inventory software lets you integrate it with other applications to create a user-friendly environment for your employees.
Different types of inventory systems
When it comes to handling goods, each industry has its own requirements. Some only deal with raw materials while others feature finished products. Regardless of the type of inventory you own, tracking it in an efficient manner is the first step towards effective business management. A small business inventory software provides you with two technology options to streamline workflows:
– Barcode system: Based on the use of a unique identification tag, barcodes are designed to speed up check-in and checkout procedures. It usually requires employees to use a handheld scanner to verify products and enter them into the system. This process lowers the chances of human error and raises accuracy.
– Radio Frequency Identification (RFID) Systems: an upgrade in the small business inventory software is the RFID which uses both active and passive technology to manage stock items. Items are attached to RFID tags to offer a means of identification. By fixing RFID tag readers throughout the warehouse, you can remotely scan and record products. This is extremely handy in increasing security. Since RFID tags are expensive than barcodes, they are usually only used for high-value goods.
Both types of inventory systems have specialized functions and perform unique tasks. Once you allocate resources adequately, you can choose the type of tagging system which is tailored to your business.
Effective inventory management: What to track?
A competent inventory strategy will aim to minimize costs associated with the stock control. Doing so helps calculate depreciation and manage disposal in a timely manner. In order to achieve this target, it is important to have the following aspects as part of your business plan:
- Time management: When it comes to dealing with suppliers, the first thing you need to estimate is how long it takes to process an order and prepare delivery. Robust stock control programs also establish how long it takes to send out goods and finalize inventory. Tracking consumption like this allows you to order well before you run out of stock. Such practices help smooth out production processes by eliminating chances of outages.
- Buffer stock: To keep production running, companies often stock up on extra inventory units. This is known as buffer stock. For instance, to ensure a critical machine is always running, your admin manager may order a few spare parts in case the original orders are defective. Precautionary measures like this let you deal with emergency situations that might arise at remote project sites.
- Work in progress: Inventory management is not limited to the procurement or movement of frequently used items. It also entails the check and balance of goods as they go through different stages of production. While goods are a “work-in-progress”, it is important to track them from the beginning of the chain until they are converted into finished products. Doing this lets you arrange raw materials or other stock before inventory reaches dangerously low levels.
- Accurate records: Needless to say, the information you document regarding inventory should be authentic and stored in a secure manner. For this purpose, a small business inventory software can be used to maintain credibility and transparency in all transactions. Such records make it easier to handle audits and manage taxes on various types of goods.
Read more: Office Supplies Inventory Management Software For Improved Stock Control
Key features of inventory software
As a small business venturing into the market, you should be aware of yearly goals and objectives. Based on your current performance, you can plan for the future. For this purpose, it is necessary to have a system which allows you to gauge your achievements. A small business inventory software provides you with the following key features:
A. Checkout and check-in to record usage
With the use of barcode labels for your inventory items, the software lets you document asset possession at all times. Employees simply have to scan the goods they want to checkout at any of the storage capacities. Doing this will record user and barcode information to ensure transparency. This data comes is vital in case of theft and misplacement. By assigning user logins, you will be able to track ownership for all items. You can then use this to trace custodianship for fraudulent activities.
Keep your database updated at all times by getting instant updates about inventory usage. A small business inventory software can improve the quality of your record-keeping.
B. Lifecycle module for depreciation management
In very basic terms, depreciation is the permanent and continual decrease in value of an asset. It is attributed to the following:
- Physical wear and tear
- Obsolesce (due to change in trend or technology update)
- Decrease in market price
- Natural disasters
- Fluctuations in business operations
The case of inventory items is not different. Companies use various methods to calculate depreciation depending on the type of stock they own. A small business inventory software can simplify this for you by tracking asset evolution over time. Sometimes, a certain equipment breaks down before its scheduled time. In such cases, it can be difficult to arrange an alternate on the spot. Recording relevant overhead costs can help avoid such situations.
C. Automated purchase orders to streamline procurement
One of the key challenges of inventory management is timely procurement. Without effective consumption tracking, it is not possible to order new stock. With the help of a cloud-based inventory system, companies can do this in a streamlined manner. You can set minimum threshold alerts for all items in your inventory so you can replenish stock in advance and prevent untimely outages. You can also link together vendors and choose the most cost-effective option. Efficient replenishment increases efficiency levels throughout the production cycle.
D. Timely maintenance for reduced downtime
Around 42% of companies are subjected to unscheduled downtime due to a lack of proper maintenance. This mainly happens because of an absence of systematic repair activities. To tackle this, firms opt for a software program that allows them to create service events. This can be done as soon as a new purchase is made to ensure that no asset gets missed out. An automated system offers you to:
- Run recurring maintenance events
- Generate service tickets (to keep track of previous and future events)
- Send out alerts through emails
- Create a list of vendors for easy access
These features allow you to prepare for service time by making alternate arrangements so daily operations are not affected by maintenance activities. Once you implement a reliable maintenance routine, you can drastically reduce downtime and overhead costs on large-scale repairs.
E. Stock locations for seamless warehouse placement
Companies often operate from various offices throughout the city. Even though this might be good for market penetration, it poses a threat to efficient management. Having multiple business sites means that your inventory goods will circulate across locations. Failure to document these movements will lead to a large number of misplaced items.
For this purpose, a cloud-based small business inventory software lets you enter warehouse locations every time you check-in inventory. Readily available data on storage positions enables employees to checkout items seamlessly. Linking assets to field locations let you distribute and utilize goods in a constructive manner.
Read more: What Features Do The Best Inventory Management Software Solutions Have?
Final word: Use an inventory management software to always stay on top of your business
A smart business decision will be to control a management disaster before it takes a toll on the revenues and inflicts permanent damage. The first step to do this is to invest in a reliable application to monitor inventory movements. Once you document the required information, you can use it to adjust strategic plans for the business year. Along with administrative features, the software provides you with tools to carry out an in-depth analysis.
Using the data on check-in and checkouts, you can determine which inventory items are being used extensively and for which purpose. This will allow you to alter your procurement plans to include bulk buying for certain goods to cut down on costs. By looking at maintenance data, you can generate reports to oversee frequently checked-in items. Frequently used items tend to deteriorate over time. In such cases, you need to replace the model with the one which can improve outcomes and reduce downtime.
Depending on your requirements you can also customize reports for certain types of items, projects or even departments. Such practices let you boost productivity as well as your ROI in the long run.
About EZOfficeInventory
EZOfficeInventory is a small business inventory tracking system that helps small businesses efficiently manage their inventories. It facilitates them with asset tracking, maintenance, and inventory control. We regularly work with small businesses to help them optimize their inventory processes and improve business insight.
