One of the most detrimental things you can do when running a business is not paying close attention to your Inventory Mistakes Management. Not only will it result in inaccurate inventory forecasting, but it will also lead to loss of sales and lesser revenue.
As a business owner, it’s your primary duty to overlook your inventory and make sure that the reports match what’s written on the books. You can avoid this by looking at the best inventory loans beforehand which will help you mitigate any inventory issues that may arise in the future.
Although sales are a major contributor to the success of your business, they aren’t the only ones that matter. Entrepreneurs should also know how to manage their inventories properly because simple mistakes can easily turn into a ripple of problems. When you lose control of your inventory, you potentially risk losing thousands of dollars and you could even put your company in danger.
So, how do you know that you’re making a mistake? Here’s a list of the most common misadventures business owners make when managing their inventory:
1. Testing Product Performance Using Narrow Measures
One of the most important inventory management techniques is to measure the performance levels of your products. This helps you make accurate inventory level forecasts.
However, many entrepreneurs make the mistake of using narrow measures to test the performance of their goods. This includes using small sample sizes of previous performances and neglecting the current demand, backorders, and inventory levels.
If companies continue to use that strategy, it won’t be long until they fall behind. When you’re checking for the sales performance, you have to check any piece of information regarding the product.
Since all are interconnected, changes in one variable could affect the others. Take time to study the product and consider all the factors when forecasting. Use as many metrics as you can.
2. Doing Inventory Checks Once a Year
Entrepreneurs who schedule inventory checks once a year may be setting their company up for problems. A lot of different things can happen within one year.
If your stocks go unnoticed for longer periods of a time, you can miss serious inventory issues like poor forecasting and shrinkage.
The best way to correct this mistake is to reassess your schedule for inventory checks. If possible, do daily or weekly checks for specific products, or what’s commonly called cycle counting.
For instance, for a particular day, you may schedule an inventory check on a certain type of product line and yet another product line the following week. This will give you a good view of where you currently stand on your inventory and gives you an early heads up on potential issues.
3. Lack of Automation
Did you know that 21% of small businesses still rely on Excel spreadsheets to monitor their inventories? What’s more surprising, is that there are businesses that make use of pens and papers to for inventory monitoring.
Manually doing your inventory checks has become an outdated strategy that experts strongly discourage business owners from doing, especially if the company is growing. Doing this can lead to serious mistakes which can be detrimental to your business. There is where manufacturing software will come in handy to change the landscape for your business. By streamlining processes, you can save a convenient amount of time, money, and resources in general. Such objectives are paramount for any industry.
Instead of relying on the traditional method of inventory checks, a wise move would be to invest in an automated inventory management system. They’re built to handle the complicated process of identifying, tracking, and fulfilling clients’ orders as accurately as possible.
Automated systems also decrease the odds of mistakes being made and make it easier for entrepreneurs to obtain stock data. This, in turn, can lead to better inventory forecasting.
If cash flow is an issue, inventory loans can help you obtain enough funding to upgrade your systems. Talk to a business financing company and get all the details.
4. Doing Inventory by Yourself
Although you can save on payroll by hiring lesser staff, you can lose more money if you try to do inventory checks by yourself. It’s easy to become prone to making mistakes and missing issues that could have been remedied if detected at an early stage. Missteps, no matter how simple, can cost you money, which you could have easily prevented if you hired a professional.
When it’s all said and done, the process of inventory management should be handled by a qualified professional. Employing the help of an inexperienced employee is worse than doing inventory yourself.
They should be able to master inventory documentation, inventory forecasts, as well as evaluating suppliers. So be sure to look at your applicant’s qualifications and experience before bringing them on board.
5. Inefficient Warehouse Management
Sometimes, inventory checks can be more tedious than necessary due to the poor arrangement of a warehouse. Inventory managers often take too much time to find a specific product to ship out. It’s important to remember that the time you waste in finding a product could also result in loss of profits.
The solution for this can be as simple as rearranging and categorizing your products into different shelves. Labelling is also important in designing efficient warehouse management.
Doing this allows you to easily find the products quickly and get them ready to be shipped. Moreover, fast-selling products should be placed in an easily accessible area so they can be easily located and retrieved, saving you both time and effort.
Avoid Inventory Mistakes by Using the Best Inventory Loans
As an entrepreneur, it’s important to avoid missteps before it causes complications in your business. Oftentimes, business owners may need to turn to a respected inventory loan company to help resolve the problems brought about by inefficient inventory management.
But remember, before making any kind of commitment, it’s always important to reassess your company first so you can find out where you’re having problems.
Also talk to a financial expert, and gain a better perspective on the different inventory loans available for you.