When asked about inventory management, do you respond with a heavy sigh or uneasy tone? Many people do, even those whose main focus is inventory or fulfillment.
Inventory management can be a monster, and gets out of control quickly. Most small business owners feel tracking inventory is more work to set up and manage than it is worth. However, there are significant benefits to tracking inventory that will improve your business. Read on to find out the top five reasons why you need to start managing inventory right now.
1. Keep Customers Happy: Repeat customers are far more profitable than new customers.
Prevent overselling by keeping close tabs on your products and quantities, and restock your inventory in a timely manner. The best way to lose a customer is to be sold out of the item they want to purchase. There’s nothing worse than calling a customer to tell them you can’t complete their order in time because you oversold. An Emory University study found retailers are likely to lose almost one-half of the intended purchases when a consumer finds an item out of stock.
With inventory tracking, you won’t oversell or commit more product than you have in stock. This will lend to a high level of customer satisfaction, and you’re likely to gain repeat business from them. Over time, a repeat customer will bring you more orders for less and is thus more profitable.
2. Save Time: Save yourself time in the long run by managing your inventory.
An inventory management system saves you from counting or eyeballing how much inventory you have. You can easily see which products you have in stock and how many of each. With everything organized, there’s no need to scramble to find – or worse obtain – products when you receive an order.
Often sellers are concerned with how much time inventory management takes to set up, and this is legitimate. Remember, it doesn’t have to be perfect, but it has to be done. You can always refine your system to work for you later on. The important part is recording your inventory and orders now so that you’re able to improve later.
3. Save Money: Spend less money on materials and shipping because you know exactly how much inventory is in stock, and what is selling.
Know exactly what materials you need to purchase and when. When you know how much inventory on hand, you’re able to buy in bulk, saving money compared to purchasing items as needed. By placing fewer small orders, you not only get the bulk discount, but also you can save tons on shipping costs!
4. Gain Useful Data: Learn how your business is really working.
By tracking inventory, you gain useful data about your business. With your inventory nicely organized, you can identify which products are your best sellers and which products earn the highest profit.
By tracking all of the timing and sales data surrounding your products, you can increase your sales. With this data, you can optimize your stocking, adjust prices, and improve your business.
5. Make Better Decisions: Be sure that the choices you are making are the best ones for growing your business.
Once you have gathered data by tracking inventory, you can then analyze it and make decisions. By looking at the hard numbers, you can make informed choices about forecasting and the direction of your business. Ultimately, you are able to be more profitable.
By identifying best sellers, you can make pricing decisions easily. You also save time doing administrative work, so you can spend more time marketing and improving your business.
One of the best benefits is that you rarely run out of products because you know exactly when you need to order or make more items and what your lead times are. Without tracking inventory, you couldn’t do any of this.
Even though it takes time on the front end, inventory management is essential for building a successful business. By starting to track inventory now, you gain valuable data for the future, save yourself time and money, and grow your business.
This guest post was brought to you by Stitch Labs, an online application for simple inventory management, order fulfillment, invoicing, expense reporting and business analytics.
