Inventory management is, by far, one of the most tedious jobs for businesses of any size, from your mom-and-pop corner store to major retail franchises. And an inventory mistake can be costly at any level. In fact, an inventory management glitch cost sporting gear giant Nike $ 100 million in sales in the early 2000s. A miscalculation resulted in shipping thousands more Nike Air Garnett sneakers, which the market didn’t want; and it called for thousands fewer Air Jordans, which were in high demand. This expensive blunder also earned the company a bad rap in the IT world for screwing up its supply chain. Or, as Roland Wolfram, Nike’s vice president of global operations and technology, lamented in an article for CIO, they became the “poster child for failed implementations.”
Fortunately the company rebounded relatively quickly once they found an automated inventory management system that worked for them, rather than against them. Your small business may not have $ 8 billion in sales (yet), like Nike. But, when every dollar counts, you can’t afford the risk of inefficient or wrong inventory control processes.
Here are ways inventory tracking both simplifies and boosts your business
- Make fewer mistakes. Even the most experienced data entry clerk makes an average on one mistake for every 300 keystrokes. With the constant flow of your supply chain, that one small error grows into thousands of mistakes over time. If your business is one of the 48 percent of companies that either use manual inventory processes (like spreadsheets or pen and paper) or don’t track inventory at all, then you could crash and burn under the weight of potential errors. And nobody wants to deal with that. Conversely, an automated barcoding system makes inventory control seamless and eliminates harmful mistakes due to keying errors or bad handwriting. You even have the choice to integrate a traditional barcode scanner or use your smartphone as a barcode scanner.
- Generate accurate data in real time. If you think your spreadsheets work good enough, ask Bryan Harej, inventory analyst at TopGolf, a growing entertainment company with eight locations around the U.S. When Harej started working for TopGolf, they also used spreadsheets to track thousands of outgoing parts and equipment. And when he needed to know what they had in stock or what was getting low, reports were never correct.
“If a facility was running low on a part, sometimes we weren’t notified until a day or two before it was needed – it would be impossible to get the requested parts to the facility on time,” he said.
And that meant games were shut down; and TopGolf could lose a lot of money in sales. So, Harej made it a priority to find a better way to track inventory. Once he implemented the right system to fit TopGolf’s needs, it eliminated the guess work. He could pull up real-time stock reports so he knew what he needed to order, without spending hours a day updating spreadsheets.
Accurate and up-to-date inventory records mean you can generate reports at random times and know they are exact. If you happen to find discrepancies, you can immediately identify the problem area and take action to correct it before incurring further loss.
- Everything is accounted for. Precision Drilling’s Niksu support center was a complete mess, according to Lee Letawsky, the company’s purchaser and parts technician. The warehouse in Edmonton, Alberta, used spreadsheets to track maintenance, repairs and overall (MRO) to the $ 900-million-plus company’s equipment.
“Parts were scattered all over and we wasted lots of time looking for things or ordering things we already had. I wanted to make inventory-control easier and more efficient,” Letawsky said about the company’s inventory process.
The combination of the right inventory management system and accounting system is a match made in heaven. The costs incurred from the time a customer makes an order to shipping, accounting entries are automatically recorded. This helps in better costing and pricing since every aspect of the business flow is well-accounted for. In Precision Drilling’s case, they also gained 100 percent data insight, fostering predictable spending and ordering within the supply chain.
- Go mobile. When you are out of town or just out of the office, business doesn’t stop. As a small business owner, it’s likely you’ll be on call to trouble shoot, so the integration of an inventory mobile app can be life changing. There are apps for every budget, with anything from free downloads to more complex programs with a monthly fee.
If you or a manger are not available to place an order on-site, mobile apps make it possible to place the order on the go. You can be sure your warehouse is always well stocked even if you are travelling for an extended time.
5. You can make better business decisions. Wouldn’t you like to more accurately identify problem areas in your supply chain? Or know which items are your best sellers and when? Or zero in on new sales targets? Accurate metrics will open up a whole new world of visibility into your business operations. The use of both hindsight and foresight metrics will be invaluable to your bottom line.
Peterson Tractor Company is a prime example. Its on-site consignment parts business was out of control. While it was a valuable service for its customers, the company didn’t have an efficient system to properly track and re-stock inventory across multiple locations. Bruno Muzzi knew an automated barcoding system was essential to change the direction of its business. And once they invested in and implemented an inventory management system, they were able to know stock levels across multiple sites and could introduce the consignment service to twice as many customers. This unique aspect of its business set them apart in the marketplace and has translated into more profits.
If you’re looking to expand your small business in the coming year, you’re in the same boat with 54 percent of small businesses across the U.S. To start increasing profits now, the first step is getting and maintaining control of your inventory.Business & Finance Articles on Business 2 Community