Inventory systems and management can be one of the most challenging and costly aspects of running a small business.
The unexpected or hidden costs involved, such as excess inventory and imported products, can threaten to hurt your business’s budget.
While you can be proactive about monitoring your inventory, investing in small business inventory management software helps you take control and alleviate some of these costs.
Here are four ways inventory management software helps you automate processes and better manage your system to prevent losses from hidden costs.
1. Provides an automated warehouse.
Many small business owners think recording inventory by hand and performing tasks manually will give them more control and save money. However, doing it this way can often create extra work and more room for error. With an automated system, the stock is scanned when it is received at the warehouse and instantly updated in the computer, and then it’s scanned again before shipment.
Automated systems keep the information in your computers accurate throughout the inventory’s entire lifecycle, from delivery at your store or warehouse to arrival at your customer’s door. An automated warehouse lets you avoid the headache and mistakes that come with trying to do it yourself and will save you money.
2. Provides effective inventory control.
Inventory systems will help you keep orders as accurate as possible, helping prevent shortage and costly overstock. Your inventory management software will track your current and predicted levels of stock so you know what you need to order.
It can also be synced with your business’s mobile devices, gather data in real time, track serial numbers, generate internal bar codes, and print out reports. An inventory system will minimize the chance of lost sales and improve customer and client satisfaction by making the inventory process run more smoothly, from the point of sale to stocking and storage to delivery.
3. Helps prioritize your needs.
Inventory software can help prevent cash flow problems by identifying which items need the most attention. For example, you might assume your most expensive items in your inventory are the most important. In fact, less expensive items affect your business more because they have higher turnover ratios.
An effective inventory system will help you determine an item’s monetary impact on the business so you can keep a higher amount of the vital stock. When you understand how to balance costs with your company’s needs, you’ll know to order fewer unimportant items, which will help promote a steady cash flow.
4. Keeps data and amounts accurate.
Inventory systems help prevent common human errors by ensuring ordering and shipment accuracy. Customers who receive incorrect shipments are less likely to pay you on time or order from you in the future. Returned inventory creates extra work for your accounting department, who will have to grant credits to the customer and manually adjust computer records, often leading to mistakes on vendor invoices.
A system helps ensure accuracy with packing and scanning the correct product and quantity in a timely manner. Ordering and shipment accuracy leads to fewer returned credits and adjustments so errors won’t set your business back.
According to an article from Entrepreneur, “companies can increase their profitability 20 to 50 percent or more through careful inventory management.” Managing your inventory is more than merely buying new products. It involves careful tracking, accurate record-keeping, and predicting amounts for future orders. Inventory systems will help prevent hidden costs and unwelcome surprises that come with manual management, improve accuracy and customer satisfaction, and ultimately help you increase your profit.