When running a small business, your margins for error are relatively thin. In fact, roughly 40% of small businesses don’t open after a disaster. Larger competitors also have the resources to spare, meaning you have to work even harder to carve out your slice of the market. That being said, regardless of the size of your organization, inventory management can snowball into costly issues. Having an inventory with too little or too many materials can cause several issues. For example, when having too little inventory you could run out of products, which, in turn, may lose you sales. Statistics show seven out of 10 online shoppers say they will look for an item elsewhere rather than wait for it when it is available. This is why it is important to have a balanced and accurate inventory.
Why Does Inventory Management Matter?
Low inventory can lead to more issues than just missed sales, it can damage your reputation. Think about it, if loyal customers can’t access a product they need, they are more than likely to view your organization more negatively. If you run out of materials, it can also create a backlog in fulfillment. On the other end, having problems with too much inventory can create a waste in capital. Depending on the materials, it can also increase in carrying costs or cause inventory to drop in value. For example, food products can go bad if not used forcing products to deteriorate before being used.
How To Maintain A Balanced Inventory
Even though inventory issues can cost your business immensely, there are plenty of preemptive steps you can take to maintain a balanced inventory. Firstly, using real-time tools such as a barcode scanner can make tracking inventory easier. Once the item has been tagged accurately, you can also use real-time data to improve your operations.
Other tips that can help you maintain proper inventory levels include organizing inventory to be easy to see and access. If problems still arise, you can also use a third-party logistics provider or use inventory management software. While larger organizations have more room for error, a well-managed inventory can help your organization stay ahead of larger competition. If you are interested in learning more strategies about why accurate managed inventory is so critical for product-based businesses, take a look at the accompanying infographic below.
Infographic created by WSI, a 3pl warehouse services company