Good inventory pratices can mean the difference between financial success and failure for your small business. If you’re putting out operational fires from dawn to dusk, inventory management may be at the bottom of your list of things to do. Take a step back and think about the potential implications of poor inventory control, like waste, shipping delays, and shipping errors. Before you start the New Year, get your inventory into shape and keep it that way.
Important Inventory Practices for Your Small Business
Organize your warehouse. From following OSHA guidelines to maintaining an efficient and effective rotation of goods, everything starts with a clean and organized warehouse. In the rush to pull stock and ship orders, it’s easy to let things get out of control. Before you head into the busy season, overhaul your warehouse, and use the updated inventory numbers to turn over a new leaf and end lax inventory practices.
Establish and enforce policies. If you have one warehouse person who works autonomously, consider the spot you’ll be in if he is injured or leaves the company. The best way to protect your assets and the health of your business is to make sure that you put procedures in place for repetitive tasks, and cross train your staff. If you’ve ever had to postpone a shipment because no one knew how to band the boxes, drive the forklift, or fill out the paperwork, it’s time to develop a procedure manual for your warehouse.
Shorten your lead times. Long lead times lose customers, so be proactive about establishing a network of reliable suppliers that will help you maintain consignment inventory and an even flow of products. This can be a challenge, but it’s one worth the time and effort you take to forge strong relationships that provide you with drop ship opportunities or give you access to regional distribution facilities. The less you worry about making products and supplies available, the more time you’ll have for other management tasks.
Control your safety stock. When you have to maintain a minimum stock of critical items, evaluate your needs carefully. Consider buying statistical software that will help you employ standard distribution and estimation methods to get a handle on the “what”, “when” and “how much” of your safety stock.
Keep excellent records. When you’re business is small, you may be able to remember when that big shipment arrived or that unexpected return hit your loading dock. As you grow, though, record-keeping will become more and more important, and the increased volume will make it impossible for you to remember everything that goes on. Maintain good shipping, receiving, return authorization and inventory adjustment paperwork. If you stage shipments, keep good records so your warehouse staff doesn’t spend valuable time looking for goods that have been aggregated elsewhere on the facility.
Good record keeping isn’t difficult, but it can be time consuming. If your volume justifies it, invest in purchasing and inventory control software that will automate repetitive processes like printing packing slips, labels, pick tickets and return authorizations. One nice thing about this type of software is that it forces you to be consistent.
Pay attention to security. No one likes to think of shrinkage as anything but bad record-keeping, but it pays to put controls in place while your company is small to make it difficult for anyone to circumvent procedures or steal from you. At the very least, make sure you know everyone who has a key to your warehouse, and utilize a locking system that uses no-copy keys.
Now, while your company is small, plan and implement an effective warehousing and inventory strategy that will meet your current needs and allow you to prepare for the future challenges that are a natural part of healthy growth.