Inventory Mistakes Your Business is Making
Your inventory system is a critical function of your business. Efficient and organized inventories allow for smooth workflow, better worker efficiency, enhanced customer satisfaction, and higher margins. Here are some common inventory mistakes that could be harming your business.
Not Enough Stock
There is a fine balance to consider when determining how much of a product should be held at a time. You don’t want too much, but keeping too little can also harm your business in several ways. When you don’t have enough stock, you are missing out on possible sales. At the same time, you could potentially lose customers. Loss of confidence in your customers can snowball quickly through word of mouth. It is important to practice good inventory management so that you can always know exactly how much stock you have and when to order or produce more. In that way, you will never run out.
While too little stock will harm your business, so does keeping an excessive inventory of stock. Storing products requires management, takes space, and ties up funds. The longer items sit on your warehouse shelves, the less value they provide. Depending on the product, excess inventory is at risk of perishing, becoming outdated, or never selling. When this happens, you either lose your investment completely, or you are forced to sell for pennies on the dollar. To avoid this costly mistake, operate using the pull system, which bases inventory on actual demand. This requires quick processing, but it increases efficiency.
Using a Manual Inventory Management System
Utilizing an automated inventory management system will improve your business in many ways. Automation saves time, allowing workers to focus on more important tasks. Automation is also more precise, eliminating human error and doing away with archaic tracking sheets and cumbersome stock books. An automated system will alert you to dwindling inventory and help you know when it is time to restock. Finally, using automation to track your inventory allows for everyone on the team to receive the same information in real time. This fosters better communication and collaboration between team members.
Perform an analysis on your inventory management system and determine areas where improvements can be made. Avoid making the above mistakes and look for others that might be slowing you down and limiting both production and sales. You never want a faulty inventory to limit your business or cost you money.
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