Entrepreneurs have to wear various hats to keep their venture’s doors open in the current eCommerce era. And, knowing how to ensure there are enough products to satisfy your clients’ demand without creating an overstock while concurrently avoiding gluts and shortages is a forte all entrepreneurs ought to glean adequate expertise on.
Regardless of your industry, inventory management is a critical factor that goes a long way in helping you track and control your supply. Consequently, optimizing your startup’s inventory and managing stock will be more streamlined without exploiting the necessary resources.
This post will give insights on the basics of inventory management and why your startup should leverage inventory control software to guarantee efficiency in all its operations.
What Is An Inventory Management System?
Inventory management is the entire process of keeping track of your startup’s supply chain management. That is, handling inventories of raw materials to finished products, and in general, everything it owns. Alternatively, inventory management entails everything from acquiring stock, storing it, using it optimally, and ultimately obtaining more when inventory is dwindling.
Inventory is among your startup’s most valuable assets. As such, inadequate, or worse, lack of inventory, especially when needed, can be highly detrimental to your startup’s operation. On the other hand, a surplus of inventory can somewhat be a liability given the risk of spoilage, theft, damage, obsolescence, shifts in demand, or spending extra money on storage facilities.
Therefore, entrepreneurs need to have a knack for inventory management. As a result, it will be more streamlined to track your sales, shipment, and production. In turn, you can astutely predict your whole supply and demand curve, know the ideal amount to purchase or produce, and eventually fulfill your sales obligations. Not to mention inventory management helps you reduce the costs and strains associated with overstocking or running out of supplies.
For startups or SMEs, Excel spreadsheets or a notepad might be efficient to track inventory. Still, it would be best for your startup to adapt and leverage advanced inventory management software tools that help businesses track their inventory instantaneously and make better management decisions for optimal results.
Why Your Startup Needs an Inventory Management System
First and foremost, appropriate inventory control strategies primarily depend on your startup’s industry. Nevertheless, here are the key benefits of an effective inventory management system:
1. Prevents Overstocking and Shortages
As already outlined, a comprehensive inventory management system goes a long way in ensuring your startup avoids stockouts and overstocking. By monitoring and handling inventory items as they move through the supply chain, you can ascertain what you have and predict what you need. Also, referencing your sales history, you can focus on future demand.
Additionally, inventory control offers enhanced inventory visibility. As such, you will have better record accuracy, know when to replenish low stock. Summing it up, you can accurately establish the current inventory levels and what’s required to meet demand.
2. It Saves Costs and Losses
There is a myriad of expenses you can cut from an effective inventory management system. For instance, overstocked inventory means that it remains in the warehouse or store without creating cash flows of profits. Also, logistics costs will most likely skyrocket due to warehouse maintenance, refrigeration, and extra labor expenses incurred when tracking and moving such inventory.
Still, some products may surpass their shelf life or seasonality, creating losses because of obsolescence. Therefore, you will likely store the ideal amount of stock by keeping tabs on your current inventory and forecasting what you need, subsequently avoiding over costs.
Additionally, understocking might lead to excessive demand. As such, your startup might incur extra expenses trying to ship products abruptly or expedited shipping.
3. Theft Control
Firms that have integrated inventory control software have lesser thefts, or better, no thefts at all compared to firms with none in place. How? With the right features, inventory management tools have the resources to ensure that your stock is correctly accounted for. That is, an adequately accounted for inventory regularly will lessen the chance that any foul play by your employees will be able to fly under the radar.
Without an inventory management system, it might take months before you notice that your stock levels are dwindling suspiciously. In addition, employee theft is far less likely if inventory systems are well-run, organized, and efficient.
4. Enhanced Customer Experience
A customer-centric approach is just one of the few techniques for setting your startup for success. Proper stock management is also crucial in making your customers’ life and experience as seamless as possible. How? For instance, with an effective inventory management system, you can limit gaffes such as customers ordering products that are no longer in stock which would have had detrimental effects on your brand.
Additionally, you will likely fill clients’ orders on time with their correct order, offer accurate inventory stock levels, and, better, the ordering process will be seamless.
There is more:
- A streamlined order fulfillment process. With an automated inventory management system, you can identify fast and slow-moving products. As a result, you can have the prevalent goods available to fulfill a customer’s order immediately.
- You can balance the flow of seasonal merchandise. As such, come peak seasons, you can deliver on those ‘must have’ items your customers fancy while concurrently ensuring you aren’t left with excess inventory stock at the end of the season.
- Improved customer satisfaction when it comes to product returns.
- Reduced lead times.
- Referencing the cost of goods sold, you can set sustainable pricing for future clients.
Ultimately, an inventory management system ensures you have what your clientele needs when they want it, and still, you can meet and exceed their expectations.
5. It Saves Time Through Automation
Instead of your startup’s employees spending a lot of time on manual data entry and form filling about inventories, the right software can automate such tasks. Advanced inventory management systems can keep tabs on vital data such as inventory turnover ratio, track sales projections, and caution you when inventory is dwindling.
6. Enhanced Productivity
A practical and organized inventory management system warrants a more productive workforce. For instance, you can channel the resources on other high-priority startup operations instead of spending time and resources managing stock, fixing incorrect orders, or searching the store for the right product.
It’s almost impractical to elucidate all the reasons why your startup needs an inventory management system. Instead, we have shed insights on the top benefits. Still, you have to be strategic in how you approach the situation. As a starting point, find the perfect inventory control software. Then you can build a productive system around the software.