Any business owner knows that keeping up with inventory is important. How important it should be, though, is something that we need to see addressed more in our part of the world.
It’s easy to see why: oftentimes, many small businesses think that inventory management is something that’s best left to “big” businesses. We often pay lip service to both clients and suppliers promising that we keep an updated inventory, but we often have a vague idea of how we could actually do so.
In this piece, we will talk about inventory management systems and why it’s important to have one keep up with the fast-paced realities of today’s digital age.
Here are the reasons why inventory management is a must for every kind of small business:
1. Because a simple spreadsheet isn’t enough to gauge the bigger picture anymore
For the longest time, the spreadsheet has become the de rigeur tool for crunching numbers. Of course, we’re not saying that the spreadsheet has no use these days; in terms of organizing data into easily broken down parts, it’s still marklessly efficient.
However, for all the good that spreadsheets do, they’re still prone to the most unavoidable mistake in any industry: human error. Imagine spending hours upon hours every day staring at numbers and letters lined up consecutively on a spreadsheet. Who’s to say you won’t make the mistake of bleeding your data together into one? That’s the kind of mistake that new modes of inventory management are supposed to prevent.
If you’re a small business owner with plans of scaling, then it’s time to look past the spreadsheet. There are more efficient systems available, and it’s to your discretion on choosing what the best system would work for your business.
2. Figuring out your inventory system at the beginning would be more helpful in organizing your business.
Speaking of scaling, one of the more common misconceptions we encounter in many new businesses is how they don’t consider scalability as an important factor. Obviously, not every business starts with the same parameters of success. However, it would really be risky to not include growth as one of the factors one would consider in running a business.
If you’re planning on starting a new business, it is necessary to do things right the first time. It is not wise to put a system once products and materials start coming in and out. Not only will it be good anticipatory behavior, but it could also save you some potential headaches down the line once more stocks go through your doors.
3. Having a good system will prevent Inventory loss
Ah, yes, this is probably one of the more unavoidable banes of any business dealing in goods: how can you be sure that the actual stock really reflects what’s recorded in the day’s inventory?
It might be anachronistic to think that in the era of computers, we’re still counting things by hand in a business setting, but that’s exactly what happens in many companies all over the world. Having a properly set up inventory management system might not eliminate the need for cycle counting, but at least it will make the process easier for managers or employees in charge of accounting for the inventory. And, of course, it would lessen instances of finger-pointing once an error occurs.
4. It will help you forecast sales
Contrary to what some might think, forecasting sales isn’t just an outward-looking process. Inventory plays a big role in said forecasting since there’s always the question of knowing where to allocate your business’s internal resources.
If you want specifics on how inventory management will help forecasting sales, then here are a couple of reasons: you might improve your business’s finances by decreasing the inventory you would have to carry, or you could even set the inventory level for specific items that are in demand due to past sales records. Now that’s something you just can’t get from looking at spreadsheet data!
You might say that your business is still too small to need an inventory system but trust us when we say that dismissing the need for an inventory system may highly likely result to more losses and delays in your business operations.