Managing inventory is one of the most important things you can do to serve your customers, but it’s one of the hardest things to get right. You need to have processes in place that keep people on track. Unfortunately, 43% of companies don’t even track their inventory.
That leads to many mistakes and dissatisfied customers. If you want to grow your business, you need to nail your inventory management strategy.
The good news is that there are many common inventory management mistakes you can learn about how to avoid making those mistakes in the future. Keep reading to learn what mistakes to look out for as a small business owner.
Bad Warehouse Layout
A bad warehouse layout is one of the most significant issues many warehouse managers face. In many cases, slow ship times aren’t because you don’t have qualified employees. It’s because they spend too much time running back and forth in your warehouse.
This happens when you place popular products in the back, far away from your shipping station. Since many of your sales are those products, people spend much of the day on their feet instead of packing products.
Placing popular products in a closer position solves this problem. Organize your warehouse to put the most popular products in the front and the least popular in the back. Doing this will minimize your employees’ time picking products to ship.
Not Forecasting Demand
Forecasting demand is a must if you want to have enough products to ship to customers—the demand for products changes based on the time of the year for many industries. On top of that, you can experience sudden surges of orders that you don’t expect.
It’s an issue if you can’t forecast these demand surges. If you don’t keep enough inventory in stock, you won’t be able to serve all your customers.
Use your inventory software and reporting tools to determine when it makes sense to order more products. Doing this will ensure you don’t run out of stock and can fulfill every order you receive.
Doing Things Manually
Yes, you can get by in business by handling inventory manually when you first start. You probably don’t have many products or customers, so you aren’t in as much of a rush to get things done.
Things change a lot when you start growing your business. So much so that a significant increase in sales can cripple your whole organization. It pays to invest in technology tools before that happens.
There are countless tools you can invest in to get started. For instance, you can buy an inventory app for small business to automatically track your stock. You can also invest in software that connects to your inventory system to update stock counts and process orders automatically.
Skipping Inventory Audits
Even if you invest in automation tools and have great employees, things won’t always go right. You may miss a shipment and forget to update your stock or make an error entering data. Your stock levels will be off when this happens.
Unfortunately, it’s hard to know if this happens if you don’t monitor your stock levels. The question is, do you have the time to give your stock an audit?
You don’t have to audit your stock daily, but you should do it on a schedule. Think about what auditing schedule makes sense for your businesses. Many businesses can likely get by with a monthly audit.
Neglecting Employee Training
Great employees don’t appear out of nowhere. While some amazing workers may be out there, they cost a lot of money and aren’t easy to hire. You may need to hire someone that doesn’t have as many qualifications if you want to find workers.
However, that doesn’t mean you can’t help the people you hire improve. If you pay people well and treat them respectfully, you’ll probably hire employees willing to improve and do everything possible to do a great job.
Offering excellent training will help make this happen. From your warehouse manager to your pickers and shippers, give people the opportunity to improve. You’ll retain more talent this way and have a more productive team.
Holding Too Much Inventory
Just like you need to manage your inventory for your popular products, the same is true for your less popular ones. Unfortunately, some business owners don’t want to get caught off guard by a surge in demand and buy many low-performing products.
The problem is that this takes up warehouse space. It makes sense if you do this with high-performers. You’re always going to keep moving those products.
The space you use for low-performers is better used for other things. You can invest in new products to see how well they perform or house more popular ones to ensure you don’t run out of them.
Neglecting the Supply Chain
You don’t only have your warehouse to worry about when managing inventory. You also need to concern yourself with the performance of your suppliers.
Even if your current vendor is doing great today, that may not always be true. You must stay on top of your supplier’s performance over time to see if you spot any problems.
If you do, reach out to your supplier to see what you can do to resolve the problem. You don’t want your supply chain to be why you can’t meet your customers’ needs.
There Are Other Inventory Management Mistakes to Avoid
The above inventory management mistakes are a great first place to start learning about managing inventory. However, your education shouldn’t stop there.
There are countless other things you can do wrong when managing your stock. Keep learning the right way to manage inventory to ensure you don’t make other common mistakes.
Of course, you’ll need to optimize the other parts of your business to grow your company successfully. Learn other smart management tips by heading back to the blog.