Good inventory management will look different depending on your industry—a Michelin-starred restaurant will manage its inventory differently than a hair salon or a car dealership, for example. SOS Inventory is the perfect operational stock control system for the small business. It is an invaluable tool for structuring information from every department to generate one clear picture of the entire organization. Flexibility is essential, especially if you have multiple stores or warehouses. Now is the time for message unity across departments and roles to ensure consumers are aware of what you sell and why the shift occurred.

Therefore, small business owners should use a sale to finish the remaining stock and stop ordering that product in the future to hold the cost down. Demand forecasting is essential to inventory management because it helps you determine the minimum amount of a product you should have https://simple-accounting.org/online-bookkeeping-services-for-small-businesses/ on hand and set reorder targets when you reach that number. You should revisit your demand forecast quarterly to adjust your minimum quantities and reordering targets. LIFO is the opposite of FIFO, ensuring that the most recently received inventory is the first out the door.

Take advantage of data analytics for optimization

Small businesses that have successfully scaled up their operations may be managing raw materials, semi-finished parts, and ready-to-ship products or managing inventory across multiple locations. As these challenges grow, it is time to dig deeper into inventory management solutions for small businesses. Effective inventory management systems can help businesses save time and money and maximize sales. Inventory management software can be adapted to a company’s existing systems.

This problem is easy to fix if you’ve found that it’s happening at your warehouse. Take the time to put a single person over inventory instead of dispersing the responsibility among multiple employees. Unfortunately, software isn’t foolproof, and it’s not going to be 100% accurate at all times. There will be times when your inventory gets off by a few items or when something is scanned into the system incorrectly. To prevent this from happening often and keep your books straight, you should regularly audit and count your inventory. Now that we have a good understanding of inventory management and some of the different ways you can manage your inventory let’s look into some of the best inventory management software practices.

Get barcode labels

For example, Singletary said, when 10 items are delivered, you’d scan them at the loading bay door. The system updates to acknowledge these 10 items are waiting for pickup. When a worker moves those items from the loading bay to Aisle 1, Bin 13, for example, they scan the items in, and the system automatically updates. Then, the warehouse manager can reference the software to understand precisely where everything should be in the warehouse and verify the accuracy of that information. Safety stock inventory is tied to your sales projections and influences your reorder quantities. It is especially important for your bestselling or essential products.

Even with some upfront investment in solutions, the long-term benefits proved beneficial to revenue and customer satisfaction. Brightpearl is a retail management system and inventory management system explicitly built for multi-channel retail businesses or wholesalers. The platform helps companies to streamline their inventory management system operations. It has all the basic inventory management features in its more expensive plan.

How inventory management pertains to your small business

Businesses end up spending precious time manually updating sheets and double- or triple-checking data to ensure accuracy. If any of these problems sound familiar, it may be time to upgrade to a new inventory management solution. FIFO, the First In, First Out inventory management method, generally results in the lowest estimated cost of goods sold and the highest net income. However, different inventory methods might be used by different industries, especially industries where the inventory purchase prices fluctuate often. The first and most important rule of inventory management is maintaining the right amount of inventory.

• Periodic inventory accounting is the most commonly used inventory management system.
• While Lightspeed for Retail integrates with other accounting and e-commerce applications, these are lesser-known solutions.
• So for a business owner, knowing what you have on hand, what’s selling, and when to reorder a product are critical aspects of a well-oiled operation.
• Here are five options for ecommerce business owners, each with strengths to suit different types of businesses.
• Effective inventory management systems can help businesses save time and money and maximize sales.
• Companies that don’t monitor and manage shrinkage are likely to oversell their inventory.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

Streamline ordering processes

The inventory software price depends on how complex your business requirements are. Before purchasing software, you should check whether Understanding the Cost of Bookkeeping for Small Businesses your business supports the momentous plan. When operations are running smoothly, vulnerabilities can fly under the radar.