Importance of Inventory Management for Small Businesses

Importance of Inventory Management for Small Businesses

Inventory Management?? – In simple words, inventory is stock of any product you purchase or manufacture. 

How efficiently you manage your stock is very important for your business. Big fish in the market manages their stock very well. But small businesses don’t focus much on stock management. They do it in a traditional way. Where we need to focus more how to manage stock or inventory for small business as per current era of digitization to upscale their businesses.

8 important factors to manage stock for small businesses:

1. Keep track of information

It is very important and first step to keep track of all the Vendor, customer and production information in the system. 

Vendor/Supplier directory can be maintained for any specific product need. It is always a good practice to keep your directory handy to fulfil your product demand & supply. 

Customer information can be tracked to take various decision down the line after or during sell

Product information must be up to date in the system and maintain the product hierarchy which will help to categorize any product and target a specific buyer segment. 

2. Know your inventory on real-time basis 

Knowing your inventory on real-time basis will always help any business to make an appropriate decision whether our warehouse is over stocked or under. So that, we can plan our sale and purchase strategy.

3. Label your inventory

Label your inventory help to track your physical inventory in a organize manner. It also helps to sell you product quickly. Knowing the product information is easy and quick with the help of proper labelling

4. Helps in re-ordering the product 

System helps to raise an accurate purchase order with the help of inventory management. You can track the product threshold and it gives us an alert which product needs to be re-ordered

5. Do the physical inventory count on regular basis

It is good practice to do the physical inventory count on regular basis which would help us to reconcile physical stock vs stock available in the system. 

It also helps us to manage – labeling is appropriate on each item; products are in proper shape and lost/found status, identify the old stock or new stock

Previous Quantity On Hand (QOH) + Received Inventory – Sold Inventory = Quantity on Hand (QOH)

6. Reconciliation of differences

After doing the physical inventory, if we find any reconciliation difference, we can drill down further and find out the root cause of this difference. It can help us to find whether any product is being theft from warehouse or not

7. Keep track of supply and demand 

Inventory management system will help to find out the demand and supply of any specific product in any season because system can track demand & supply of any product in any season. So that, we can prepare and maintain the adequate inventory for sale

8. Helps in decision making

Inventory management system would help us to make lot of decision making like purchasing the product accurately and prepare for sale of any specific category

We can also target the specific section of buyer with specific product as per the demand. We can also know the trendy product in the market. We can know the total revenue for a specific period

Now with the 8 important factor of inventory management system, small business should focus more to manage their inventory with inventory management system to enhance their business.