Every company needs an inventory management system. Whether you’re in wholesale, retail, service or virtually any other industry, you have to keep track of your products. Here are five reasons why it’s so important to use small business inventory software:
If you have too many products in your warehouse, you increase the risk that they will become obsolete, damaged, spoiled or stolen before you can sell them all. Depending on which industry you’re in, you’re probably more worried about some of these risks than others. For example, if you’re in the technology industry, you don’t want your expensive products to become outdated, damaged or stolen, but you probably don’t care about their freshness date. Food producers, on the other hand, put product spoilage high on the list of inventory management concerns.
Having too much inventory doesn’t just increase your risk of paying more in the future; it costs you more money all the time. Where will you store the extra inventory? You may need to buy a larger warehouse than you really need or rent trailers if your warehouse isn’t big enough. Plus, you have to provide security to prevent theft. And don’t forget about the money that’s tied up in inventory that you could have used to hire personnel or grow your business in other ways.
On the other end of the inventory spectrum, if you have too few products in your warehouse, you face a whole other set of risks. Your customers don’t want to wait too long to get their orders shipped to them. So if you run out of the products they’re looking for or if your picking, packing and shipping processes are too slow, you could drive customers away.
Inventory management can be time-consuming, especially if you’re trying to do it by hand or in Excel spreadsheets. Speed is everything in business. How fast you reorder products, ship customer orders and update your inventory records could make or break your company. That’s why an automated inventory management system is so important. Scanning product barcodes and setting up automatic reorder points can save valuable time by streamlining complex processes.
You can’t afford to be purely reactionary in your inventory management. You need to start planning ahead and being proactive. Instead of being unprepared for sudden spikes in sales, try to notice these trends ahead of time by monitoring social media channels for mentions of certain products and looking at historical records to spot seasonal upticks in sales. All of this is easier said than done. It goes back to having a powerful inventory management system to free up your time and do most of the data analysis for you.